How To Select a Financial Advisor

1. How To Select a Financial Advisor • Welcome to the Registry webinar that describes the most important information you should review “before” you select a financial advisor • Webinar Duration • Number of Slides: 18 • Viewing Time: Approximately 8 Minutes • Jack Waymire, Narrator • 31 years of financial industry experience • Author, Who’s Watching Your Money? • Co-Founder, PaladinRegistry.com

2. About Paladin • Paladin is an independent information services company; not a financial services company • The Registry is a unique source of objective information about financial advisors, planners, and firms • No advisor or firm has an equity interest in Paladin • No advisor or planner is employed by, licensed by, or affiliated with the Paladin Registry • Paladin is not licensed to sell any investment products

3. Paladin Research • Paladin has surveyed more than 4,000 consumers to obtain factual information about their range of experiences with advisors and planners • Paladin received input from more than 550 financial professionals about their range of experiences with consumers • Paladin combined the input from both sources to develop the services on this website

4. Immediate Need • Your most “important” financial need is the achievement of your long-term goals. For example: • A comfortable lifestyle during retirement that may last 30 years or more and financial security late in life when you need it the most • This means you have to invest your assets in a prudent manner that will also produce the returns you need to achieve your goals • If you are going to rely on an advisor to help you achieve your goals, your biggest “immediate” need is selecting a quality professional who can help you develop a strategy and invest your assets

5. Major Financial Risk • Your need for an advisor introduces a major financial risk • Your biggest risk isn’t the volatility of the securities markets. It’s bad advice when you invest in the markets. • That’s because bad advice negatively impacts all of your financial results • You make less in rising markets • You lose more in falling markets • You fail to achieve your long-term financial goals • Incompetent and/or unethical advisors provide bad advice

6. Competence & Ethics • There’s only one way to avoid the risk and consequences of bad financial advice • You must select a competent, ethical advisor who has knowledge and services that will help you achieve your financial goals • However, selecting the right professional is not as simple as it may sound • The financial services industry is dominated by a sales culture that allows low quality representatives to market themselves as competent, ethical experts • It’s up to you to know the difference

7. Advisors vs Sales Reps • There are two types of licensed individuals who market investment services and products • Financial advisors are licensed to provide investment advice for fees • They provide ongoing services • They are paid to help you achieve your financial goals • Sales representatives (reps) are licensed to sell investment products for commissions • They make one-time recommendations to sell their products • They are not paid to help you achieve your financial goals • You want an advisor, not a sales rep, helping you achieve your financial goals

8. Subjectivity Benefits Reps • Too many consumers use subjective advisor selection processes that benefit lower quality sales reps • The rep’s personalities and sales skills have major impacts on your selection decisions • They are also adept at telling you what you want to hear - for example, that they can provide high returns for low risk • Personalities and sales skills have nothing to do with their competence or ethics • Slick presentations sound good, but they don’t help you achieve your goals • In fact, these presentations create risk for you

9. Objectivity Benefits You • You need facts so you can make an informed advisor selection decisions • Facts help you identify advisors who are real financial experts • Facts help you avoid reps who “sound” good, but provide no documentation for their credentials, ethics, business practices and services • Objectivity helps you select the best advisor for the right reasons • The best advisor is the one who has the highest probability of helping you achieve your goals

10. Information Gathering • There are three rules for gathering important information from advisors and reps • #1 - You should control the type of information you need and not the advisor or rep • When they control information you only hear what they want you to hear • #2 - You should ask all advisors the same questions so it’s easy to compare their answers • #3 - You should require all responses in writing • You want a written record of what was said to you • Documentation minimizes the impact of their personalities and sales skills • Documentation increases the probability you are getting factual information

11. Key Selection Criteria • Fiduciary Status • Sources of Expertise • Ethical History • Disclosures • Business Practices • Financial Services

12. Fiduciary Status • The best investment professionals are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs) • RIAs and IARs are fiduciaries • They can provide financial advice and services for fees • Several regulations apply to investment fiduciaries and not sales reps: • They are held to higher ethical standards • They must put your financial interests ahead of their own • They must provide certain disclosures in their firms’ ADV Part IIs • Only select an acknowledged fiduciary as your advisor

13. Sources of Expertise • High quality professionals can “prove” they are financial experts • They provide documentation for their sources of expertise: • Thousands of hours of education and specialized training • Years of planning and investment experience • Association memberships with continuing education • Credentials of other professionals they work with • Do not hire advisors who can’t, won’t or don’t provide documentation for their competence

14. Ethical Background • High quality professionals have clean compliance records • No complaints, lawsuits, or actions from clients, companies, or regulators • They provide CRD numbers so you can check their records at the NASD • They provide insurance license numbers if applicable • High quality professionals also have clean criminal records • Yes, convicted criminals can obtain securities licenses • No, there are no disclosure requirements • Be extra cautious when advisors say they are licensed, but fail to provide CRD numbers

15. Disclosures • Quality advisors with nothing to hide volunteer answers so you don’t have to ask all of the right questions • Advisors who provide voluntary disclosures are safer selections • Reps who don’t provide disclosure are riskier choices. What they don’t tell you may damage your financial future • Disclosures should always be in writing and include information about the professionals’: • Credentials, ethics, business practices, services, compensation, and potential conflicts of interest

16. Business Practices • Most business practices benefit advisors, reps, or companies. Other practices may benefit you. Consider the following: • The best advisors are compensated with fees like other professionals • The best advisors provide performance reports and review their content with you • The best advisors do not have potential conflicts of interest • The best advisors meet with you on a regular basis and are accessible by telephone and Internet

17. Financial Services • High quality professionals provide sophisticated advice and services that help you achieve your financial goals • Sophistication is important because the markets are complex and they change daily • The services are ongoing and not one time because you need a continuous flow of information • All advisors should provide these core services: • Written investment strategy and policy • Asset allocation • Manager selection • Risk management • Performance reports

18. PaladinRegistry.com • We make the advisor selection process easier and safer • View the webinar titled “Why Select an Advisor from the Registry” • We provide comprehensive documentation for each advisor who is profiled in the Registry • Registry/View Documents/Advisor’s name • We provide a questionnaire and rating system for advisors who are not profiled in the Registry • Accessible on the Registry home page • Thank you for attending this webinar