Evaluate My Advisor
It would be completely self-serving to say, “Yes.” And, we don’t believe all advisors should be evaluated. When do we recommend an evaluation?
- Performance does not add up, you seem to be behind all the time when you check your performance at review meetings or on-line
- Fees are either hard to understand or you don’t know them at all
- Communication about your goals at review meetings is like talking to a Sphynx. You can’t quite understand what is going on
These are common issues we feel would warrant an evaluation.
We look at 16 different areas of your advisor’s business to make certain they are doing exactly what you expect them to do - performance, fees, advisor/teams background and more. Because we review and find advisors for our clients we can compare advisors quickly not only to benchmarks on performance and the managers they are using but compared to other advisors.
Every client should expect only the best from their financial advisor - you are paying the advisor to work on your behalf. An evaluation is a way to prove you are getting what you pay for with your financial advisor.
We have provided reviews where the advisor did not know they were being evaluated. The client receives a request form from Moenio that provides us with the information we need to perform our evaluation.
In our opinion, we’d tell the advisor. In every case the advisor is first, happy they are getting reviewed and not fired, and secondly, the review allows the advisor to see areas they should improve (if we recommend they should stay with that advisor).
We’d love to say, “One week,” but this has never been the case for a few reasons. We request information from the advisor and their firm creating a need for them to gather information, this takes time. Our goal is to do an evaluation within 30-days. In addition, it takes time to go through the information provided and fairly put together an accurate picture. From doing a background check on the advisor and team to digging into why they choose one manager over the other, these all take time.
It might not be right for you. This is basically an audit of your advisor, broker, planner, banker or whomever else manages your money. It can be hard for our clients to realize they’ve been paying too much or not earning fair risk-adjusted returns on their investments.
ABSOLUTELY NOT!!!! This is a clear conflict of interest. We have no goal to manage assets.
Find An Advisor
We agree 100%, you can find an advisor. The question becomes how do you find "the right advisor." Ask a friend, ask a professional like an attorney or CPA, how about a co-worker? The challenge becomes, “how do they know the advisor is actually good?” By good we mean good risk-adjusted performance, fair fees, and doing the right thing for their clients?
In a recent report published by morningstar - Alpha, Beta, and Now Gamma - they showed that choosing an advisor can add an additional 2% + in performance. For a client having $1,000,000, over five years this can add an additional $150,000 + (using 4% and then 6%). At $10,000,000 this can add an additional $1,100,000 +.
There are over 600,000 advisors registered with FINRA in the US. In most major cities you can have 5,000 or more. We’ve found the best advisors, those getting referred most often, are not actually providing great risk-adjusted returns for a fair fee but are the best at marketing. Not what we consider the right choice for our clients?
We begin our process the way an advisor should begin their process - by understanding what you need.
Every "type" of client is different.
- Family Office
- Athletes, or those with short-term asset growth
- International Family wanting assets managed in US
Each of these have specific needs and then, based on the the family or people involved, there are more needs required. Our job is to make certain we understand enough about our clients to be certain they are working with an expert in what is required of them.
For example, an international family with assets in a foreign country, held in trust are different than a US family worried about passing assets to their children or grandchildren. A "generalist" financial advisor would not be right for either one in our opinion. We want someone who can understand the individual needs and does not "learn" on the job.
Our first step is to gather information from our clients to understand them; specific needs for assets, type of assets held, where they would like their advisor, risk tolerances, and more.
Once we build the “fact sheet” from our first meeting we then reach out to the firms or RIA’s we agreed upon. Using this fact sheet, we ask these firms/RIA’s to provide us with the advisors best fitting the needs of the client. As experts, and after working with hundreds of advisors, we can tell immediately if we are getting their best.
Every search is customized. We do not use advisors we evaluated or found from past searches. The only exception would be when a client requests a specific advisor they know or have worked with in the past. In addition, if we do find an advisor we have used in the past that fits the client profile, we discuss this with the client to verify whether to use this particular advisor in our search.
This is based on a conversation with the client to see how many should be included. We like a minimum of four advisors in our search but ideally we would have six.
We start by reviewing information we requested in the initial fact sheet. This includes items such as fees, historical performance, and more. Although we do review 16 areas of an advisors practice, for the initial evaluation on finding an advisor we evaluate 10 areas and narrow the advisors from these 10.
Absolutely. We would never “pick” an advisor for a client without the client getting to know the advisor or team first. It is important for a client to not only know the advisor is good but also to have chemistry and trust. After our initial evaluation, the remaining two or three advisors get to meet the client.
Nope. Up until the point of the final presentations the advisors have contact only with our firm. We do this for both confidentiality and to keep our clients from getting inundated with emails/phone calls.
Not at all. We believe every option out there is a possible solution for our clients. We have included RIA’s, Banks, Wealth Management firms, and fee-only practitioners into our searches.
Our clients pay us. We do not accept compensation from firms or advisors when doing an evaluation or finding an advisor, period. This allows us to avoid conflicts of interest.
Currently, there is a movement on-line to help clients "find an advisor." You enter your zip code and needs, then miraculously you are provided a detailed list of a few advisors. Unfortunately for those using these services, the list is actually provided based on an advisor paying to be included. They pay the on-line service provider and the advisors list their own "expertise." We find this to be full of conflicts and definitely not in our client.s best interest.
For Advisors and Teams we Evaluate or Find
We are a client advocacy firm helping make certain our clients have good if not great advisors. We believe investors should have an advisor(s) to guide them.
We do not want it to be a beauty contest, we want facts. Therefore, we send out a request to all the advisers we evaluate or find specific to performance, fees, team, firm, type of practice run, and 10 additional areas. We allow our clients to individually weight what areas are most important to them when evaluating an advisor's business.
Our initial request always includes historical performance, two-years of manager and asset allocation choices, and fees. We ask the advisors to provide three redacted client reports so we can confirm historical data.
Although we believe every advisor offers good returns for our clients we must verify it. We do not choose advisors because “we like them,” we choose them because they have a solid, verifiable business our clients can trust. Historical returns are just one of many areas offering insight into an advisor’s business and their past.
Although limited, we do understand there are a few firms who do not allow their advisers to provide historical data. As well, there are advisers who do not wish to provide this data. As a consultant requesting information from an advisor, rather than a solicitation, there is a "no-action carve out for firms like Moenio." However, if an advisor and/or firm does not provide the requested information, we ask for other information to help us verify past historical returns. Our goal is to make certain the advisor has performed in the manner they are stating to us or our client.
Investment Counsel Association of America, Inc., No Action Letter SEC (March 1, 2004)
Many advisers tell us they cannot provide historical information as this constitutes “cherry-picking.” One of the reason we ask for three clients and two-year historical manager selections and asset allocation is to alleviate cherry-picking. Having three clients with similar portfolio’s is no longer cherry-picking when cross-referenced against managers and allocation. A moderate portfolio or moderately aggressive portfolio is easily seen through our requests and we can run an attribution analysis to see outlier holdings/returns.
This is the worst type of cherry-picking. Letting an advisor pick a “new” portfolio without any reference to past choices. It is called survivor bias and is not in our client’s best interests.
We do request forward-looking portfolio’s but it has a historical perspective tying together past and future. For example, if we see new managers in the “future” portfolio relative to the current managers being used today, that would indicate to us a potential concern. Why the sudden shift in a portfolio manager if the current manager is actively being used?
We analyze 16 areas of an adviser’s business and 4 of these are particular to performance. If we assigned an equal score to each of the 16 areas, 6.25, then the adviser not providing historical data would start with a high score of 75.
We have meet some absolutely wonderful advisers but the fact remains the business of being a financial advisers is about managing the assets for a family. How someone has performed in the past is indicative of their performance in the future.
In the client fact sheet we provide preliminary data giving guidance on portfolio construction accounting for cash flow, tax situations, governance, and other areas. It is perfectly acceptable for the portfolio to change as the adviser becomes more familiar with the client but, from our perspective, we want to make certain each advisor is providing solutions based on the client fact sheet so our comparison is accurate and fair. If we are asking for a moderate portfolio and the client becomes conservative, or is conservative, the moderate portfolio will provide a sound "look-through" for our evaluation.
No one receives your information. All adviser and firm information is keep confidential and only shown to the client as needed.
At the second stage of our evaluation is when the adviser/team meets the client. The second stage is when we have finished our initial evaluation of the advisor(s) and cut the four to six advisor's down to a few.
The process takes anywhere from eight to twelve weeks. This has more to do with gathering the information, utilizing the Client Adviser Assessment Report to evaluate it and then narrowing the advisors to the top two or three.
You will initially receive a request for information - client fact sheet. We take 7 to 10 days to review the information and then follow-up with additional questions and/or a meeting. From this stage we then narrow the advisers down to the final 2 or 3. Each of the teams at the second stage will meet the clients to do a full presentation.
We do not accept money from advisors or their firms. We are completely independent and our client's pay us for the evaluation.