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The Only Guide You'll Ever Need for the Right Financial Plan: Managing Your Wealth, Risk, and Investments by Tiya Lim, Kevin Grogan, Larry E. Swedroe

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Appendix D. How to Choose an Adviser You Can Trust

The objective of this book is to make you an informed investor. We have attempted to provide you with the information necessary to design and implement a prudent investment plan giving you the best chance of achieving your goals. There are investors who recognize they have neither the knowledge nor the discipline required to be successful on their own. They also recognize that a good financial adviser can add value in many ways. Other individuals would rather have someone else focus on financial matters so that they can focus more of their attention on important things in their lives: family, friends, community service, or hobbies. We offer the following advice for those thinking of employing a financial adviser.

When interviewing a financial advisory firm, have its representatives make the following twelve commitments to you. Doing so will give you the greatest chance of avoiding conflicts of interest and the greatest chance of achieving your financial goals.

  1. The firm's guiding principle is that the advice provided will always be in your best interest.

  2. The firm will provide a fiduciary standard of care: the highest legal duty one party can have to another.

  3. The firm is a fee-only adviser, avoiding conflicts that commission-based compensation can create.

  4. The firm fully discloses potential conflicts.

  5. The advice is based on the latest academic research, not on opinions.

  6. The firm is client centered: It doesn't sell products, only advice.

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