Reviewing and evaluating an investment advisor

As your financial needs and expectations change, reviewing and evaluating your portfolio performance and advisor relationship can help you continue to fine-tune your financial strategy.

Your review and evaluation  While review of your performance reports is essential to your evaluation process, remember that they are snapshots of a market that naturally experiences highs and lows. Since most independent advisors focus on building long-term relationships with their clients, you may also want to give weight to a more subjective consideration: the growth in your relationship and confidence with your advisor. That said, at the onset of your relationship you and your advisor should also determine objective measurements of your agreed-upon investment strategy.

Evaluation checklist _______ Evaluate within the context of your goals and objectives. Example: If you have a long-term investment strategy, you should allow a full market cycle (3-5 years) to assess your advisor's work. _______ Evaluate through relevant benchmarks. Example: An advisor who can beat the relevant benchmark would be considered to be performing within expectations even though absolute returns for the quarter may be low or negative. _______ Evaluate first-year performance separately from subsequent years.