In the following video, Dave Young, President of Paragon Wealth Management, discusses why the size of an investment firm so important when determining who should manage your money.  He talks about the benefits of a small investment firm and the advantages they have in managing a portfolio.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

The past few months we have been working on some new videos about Paragon Wealth Management to help investors understand who we are and what we are all about. This short video is an introduction our company. It also shares our views on active money management vs. buy and hold. This video was created for our website. If you would like to see steps 1, 2, and 3 mentioned at the end of the video, visit www.paragonwealth.com

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

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Industry estimates show that approximately 85% of financial advisors do not have fiduciary responsibility. This includes stockbrokers, insurance agents or simple sales representatives. They may hold various licenses, but since they are not fiduciaries, they are often more interested in selling insurance and investment products than managing your portfolio.

An advisor with fiduciary responsibility is held to a higher ethical standard and should have the knowledge to provide sophisticated wealth management services and advice.

Below are excerpts from an article that discusses common misconceptions about what it means to be a financial advisor.

Personal Finance 101: What is A Financial Advisor

A common misconception about financial advisors is what one must do to be able to be called a financial advisor, financial consultant, or similar term. To most people’s surprise there is no legal, educational, or licensure requirement to be a financial advisor-anyone can call oneself a financial advisor. . .almost.   This applies to financial advice in general, however, advice about securities (stocks, bonds, et cetera) and insurance are a little different.

There are also different types of financial advisors, and as a consumer, you should know which type you are working with, and what the pitfalls can be from working with each type.

There are three main types of financial advisors out there: those who get paid commission, those who are only paid a consulting fee, and those who are paid both. An advisor who is paid any type of commission is a salesman. If you ask your financial advisor how he or she gets paid, they should tell you.

To help identify which type of advisor you are working with, here are a couple different sources where you can find financial advisors:

-Life insurance agents: love to call themselves financial advisors, however, ALL life insurance agents are trying to sell a product (life insurance). Some insurance agents are more honest than others, and some even give out great advice, while some love to pretend they are unbiased financial advisors. fundamentally, their interests lie in being able to support their family by selling you a product, and you should be cautious of the advice they give out.

-A Person working at your bank: may offer investment advice about bank products, including CD’s, money markets, or opening up an IRA or Roth IRA. Know that this person works for the bank, and that his (or her) loyalties in the end lie with the bank.

-Securities brokerage agents: work for a company that primarily sells securities. These agents may also offer insurance products (but usually through another company). Securities agents are paid commissions, and are usually offering advice about which investment you should buy-you have probably already made the decision to invest by the time you have called these people.  As a consumer, know that commissions on various securities differ, so you should put the agent on the spot and find out if they have an incentive to push a certain product at you.

-Financial planning firms: have two basis structures-fee-based and fee-only. Fee only means the advisor will not charge you a commission-even if you purchase a product. Fee-based means they charge a fee and also get paid commissions. These firms are often smaller and locally-owned. Even though fee-only advisors charge you a fee, the advice they give out is often far superior to what you would get elsewhere, and, in the end can SAVE you money from by steering you with the right services (rather than shove you into a product

In the end, it is up to you to find someone you believe is giving you appropriate financial advice. Financial advisors do have a duty of care to their clients-fiduciary responsibility.

Visit examiner.com to read the entire article.

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Our financial advisers at Paragon Wealth Management have written articles with tips on the best ways to select a financial adviser. They recommend asking these five questions before deciding which financial adviser is best to hire for your asset management.

1- Is the financial adviser fiduciary? Does the adviser have fiduciary responsibility?
2- What is the adviser’s experience? How many years have they been managing money?
3- What is the adviser’s track record? Can they show you their performance history?
4- Is the adviser paid on commissions? If so, you should not talk to them.
5- Does the adviser charge a surrender fee if you decide to leave? They should not charge a surrender fee.

To add onto this list, I would like to add these seven questions from the Wall Street Journal. Some of them are similar to the questions above. 

Excerpts taken from the Wall Street Journal on April 13, 2009

Seven Questions to Ask When Picking a Financial Adviser
Written by Shelly Banjo

1- What is the adviser’s background? Wayne Cooper suggests, “thinking like an employer.” Look at the potential adviser’s criminal and regulatory record as well as references from past employers.

2- What do the adviser’s clients say? Don’t depend on the reputation of a big firm or recommendations from friends, family, etc. Ask the adviser’s clients. They might have a different story.

3- How does the adviser get paid? This will help you know if the adviser is working in your best interest.

4- Where are the adviser’s checks and balances? When you purchase investments, make sure you are writing checks to a third-party custodian, like Fidelity Investments Co. or Charles Schwab & Co., not to your financial adviser directly. Also, find out what auditors the adviser’s firm uses.

5- What is the adviser’s track record? The adviser should be able to show you a track record. Don’t let them use an excuse of why they can’t show it to you.

6- Can the adviser put it in writing? Ask for a formal written outline of the services the adviser will be providing and what fees you will be paying.

7- What do other pros think? It’s imperative that you double-check any big moves-especially in this turbulent economy. That means knowing the basics behind your investments, insurance, estate planning and taxes and then turning to other experts for confirmation.

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Sometimes people ask us what the difference is between money managers and financial planners. This is our typical answer:

Money Managers- usually have more training. They actually manage the assets such as a mutual fund or a hedge fund. They make investment decisions, build portfolios and creat investment strategies. If you need to meet with a money manager, it is best to talk with a Chartered Financial Analyst (CFA) because they have more training.

Financial Planners- this term is used very loosely. Almost anyone can call themselves a financial planner. They usually gather your information and then try to sell you products because their pay is based off of comissions. It is better to talk to a Certified Financial Planner (CFP) because they have more training.

At Paragon, we have money managers such as Nathan White CFA, who is our Chief Investment Officer. He actively manages our clients’ money and continuely finds ways to improve our investment strategies and investment processes.

Paragon’s money managers are not paid on commissions, and do not sell products. If you would like a financial plan, our money managers gather your information and give you a plan based on your personal goals and objectives without trying to sell you something you don’t need.

photo by emdot

There are several reasons why a person might need or benefit from investment services. Here are a few.

1. You don’t the time or interest to follow the stock market regularly to make your own trades.

 2. You don’t have the resources and investment information to make wise decisions to invest your money on your own.

3. You need help reaching specific financial goals, like paying for your children’s education or preparing for a comfortable retirement.

4. You’ve been putting your money in bank CD’s, and you are ready to do more with your money.

5. You want to put your money away for a few years and not worry about it, but you don’t have the expertise to do it yourself.

6. You want to take the emotion out of investing and let a professional handle it.

This list could go on, but these are some of the main reasons.