September 13, 2018, 12:09 PM

Things to Think about in Choosing a Wealth Manager

By Kevin P. Sweeney, JD, CFP®

Choosing someone to provide you with guidance for your financial life can be a daunting task.  There are the understandable concerns with entrusting someone to manage your hard-earned assets, your life’s savings, and with finding someone to provide you with financial planning guidance you can trust.  The task is made more difficult because, while the financial services industry is heavily regulated in many ways (by, for example, the Securities and Exchange Commission and the Financial Industry Regulatory Authority), it still has a sort of Wild West quality about it.  What potential client can distinguish meaningfully among the services, legal responsibilities and regulatory requirements of stockbrokers, advisors, financial planners, financial consultants and insurance agents or among CFP® certificants, CFAs, CPAs, EAs, ChFCs and CLUs, to name just a few?  And in some ways it’s a field that sows its own confusion with many practitioners calling themselves “advisors,” while the SEC calls them “advisers.”

So what’s someone in search of financial assistance to do?  Here are some things to consider if you’re in the market for an advisor (or a stockbroker, or a financial planner or . . .).  While the list below is not exhaustive, it highlights key issues.  (For brevity and simplicity, I’ll use the term “adviser” for the remainder of this article.)

  • Will I have a fiduciary relationship with the adviser?  A firm that is a registered investment adviser (“RIA”), that is, one regulated by the SEC, must act as a fiduciary to its clients as to all investment matters.  That means that the RIA must put a client’s interests first and act in the client’s best interest at all times.  Ask yourself if you really want to work with an advisor who won’t commit to acting in your best interest.  Would you hire a lawyer to try your case if you knew that during the trial she could be deciding between acting in your best interest and hers?
  • How is the advisor paid?  There are a number of possible arrangements, among the most common of which are:  (1) fee-only; (2) commissions; or (3) fee-based.  A fee-only advisor derives all income solely from the firm’s clients and does not accept commissions based on product sales or payments from third parties.  At Modera Wealth Management, LLC (“Modera”) we believe that being a fee-only advisor helps reduce possible conflicts of interest and better aligns our interests with the client.
  • Is the advisor working at an independent firm?   This can be important as independent firms are not subject to outside ownership influence and should be accountable only to their clients.  An independent firm also should provide an open architecture which means the adviser is able to select investments/products that are in your best interest, thereby avoiding advisors recommending their own firm’s products to serve their own interests.
  • Does the adviser disclose in writing, and is he/she willing to discuss with you, conflicts of interest that the firm has?  By its nature, conflicts occur in managing investments.  The keys are whether firms disclose them to make potential clients aware of the conflicts and how firms resolve them.  Be leery of any adviser who tells you that he does not have any conflicts.  You should run, not walk, away from that meeting.
  • Does the adviser use a custodian to maintain client assets?  Don’t let your adviser take custody, that is, hold possession of your assets in his name.  One factor that assisted Bernie Madoff in his scam was that he not only managed client assets but also had custody of them.  In such a situation, the risk to the client can increase greatly.  An independent, “qualified custodian” performs a critical service in maintaining client assets and acts as an important safeguard against potential fraud or misappropriation by the adviser.  Insist that your adviser use one.
  • Research the adviser and firm to learn about their regulatory histories.  You can use the SEC’s Investment Advisor Public Disclosure (“IAPD”) site at and FINRA’s BrokerCheck site, https://brokercheck.finra/org to research brokers and brokerage firms.  If the adviser is a member of the National Association of Personal Financial Advisors or a CFP® certificant, you can check their sites as well for additional information.
  • Conduct more research to learn about the adviser’s typical client (is it similar to your situation?); expertise for your specific needs; investment philosophy and extent of the services provided.  As to the latter, does the firm provide financial planning and investment management or just one of the two?  Also consider the adviser’s credentials.  The CERTIFIED FINANCIAL PLANNER™ (CFP®) designation and Chartered Financial Analyst (CFA) are considered two of the most highly regarded.  Be skeptical of supposed credentials that lack any real meaning, particularly some of those touting specialization in planning for seniors.
  • Finally, be alert to the following red flags
      • The adviser’s fees or commissions are opaque, or the adviser claims her services are free;
      • The adviser earns fees from third parties for referring you to someone for other services (estate planning, CPA);
      • The adviser claims to be able to out-perform the market, has a special secret to accumulating wealth or promises high returns with low risk;
      • The adviser guarantees a specific return, unless it’s a CD or some other purely fixed investment;
      • The adviser uses funds that are all products of the adviser’s firm.  Ask whether the adviser will earn more by recommending certain products or investments.

We at Modera strongly believe that working with a fee-only, registered investment adviser who is legally obligated to act in the client’s best interest is the preferred way to deliver investment and financial planning services.


Disclosure:  Modera  is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, North Carolina, Florida and Georgia. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements.

For information pertaining to Modera’s registration status, its fees and services and/or a copy of our Form ADV disclosure statement, please contact Modera or refer to the Investment Adviser Public Disclosure web site ( A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money.

This article contains content that is not suitable for everyone and is limited to the dissemination of general information pertaining to Modera’s investment advisory and financial planning services and general economic and market conditions. Nothing contained herein should be interpreted as legal, tax or accounting advice, nor should it be construed as personalized investment, financial planning or tax planning advice. For legal, tax and accounting-related matters, we recommend that you seek the advice of a qualified lawyer or accountant. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed herein will come to pass. Investing in the stock and other markets involves gains and losses and may not be suitable for all investors. Information presented herein was accurate at the time of publication, is subject to change without notice and should not be construed as a solicitation to buy or sell any security or to engage in a particular investment, financial planning, tax or other strategy. Diversification does not guarantee a profit or guarantee against a loss.

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