Share

Top 10 Questions to Ask Your Financial Advisor

By on August 25, 2020
Categories: CHOOSING YOUR FINANCIAL ADVISOR
Documents: Download PDF DY-Top-10-Questions.pdf

We believe it is of utmost importance to work with a financial advisor who has a fiduciary duty to his or her clients. Since inconsistencies and confusion abound regarding how financial services professionals are compensated and their level of client responsibility, we set forth a series of very direct questions for you to use when evaluating whether your advisor is acting in your best interest.1

In 1991, Dowling & Yahnke Wealth Advisors helped start a revolution in wealth management—independent, transparent, and world-class financial advice predicated on personal relationships. Today, D&Y manages approximately $4.7 billion and provides portfolio management and financial planning services to over 1,200 clients in San Diego and across the United States.2 Our only source of revenue is a competitive management fee – no commissions, unnecessary trades, or competing incentives. We are fiduciaries to our clients; always have been, always will be.

1. WILL YOUR FIRM STATE IN WRITING THAT YOU ARE ALWAYS A FIDUCIARY?

Yes. We have served our clients as fiduciaries since our founding in 1991.

2. WHAT IS YOUR EXACT FEE SCHEDULE?

We strive to offer our clients great value and transparency with our fee schedule. Our investment management services fees are charged as a percentage of the assets under management according to the following annual rate schedule – designed to lower your marginal rate as your assets grow:

TIERED RATE SCHEDULE3 RATE
First $2,000,000 0.85%
Next $1,000,000 0.70%
Next $7,000,000 0.50%
Above $10,000,000 0.40%

3. DO YOU CHARGE AN ADDITIONAL AMOUNT FOR FINANCIAL PLANNING?

Typically, our investment management and financial planning services are provided under our asset-based investment advisory fee arrangement. In special situations, we may consider charging by the hour or a retainer.3

4. WHAT DOES COMPREHENSIVE FINANCIAL PLANNING LOOK LIKE?

In addition to investment management, we provide personalized financial planning. We start by determining what you want most out of life. Then, we implement a financial plan that supports your goals throughout your journey. Our financial planning services may include retirement planning, tax planning, saving and debt reduction strategies, estate plan review, charitable gift planning, executive compensation review, recommendations regarding insurance matters, and consultation on various other personal financial issues. We can address this breadth of financial planning challenges to help turn your dreams into reality.

5. THERE ARE COUNTLESS FINANCIAL SERVICE ACRONYMS. THE CFA AND CFP® ARE WIDELY ACKNOWLEDGED AS THE BEST LICENSES IN THE INDUSTRY. WHICH ONES DO YOUR ADVISORS HAVE?

All our Lead Advisors are required to have earned or are in process of obtaining the CERTIFIED FINANCIAL PLANNER™ designation. Many are also CFA Charterholders. To attain these credentials, candidates are required to dedicate multiple years of study and experience. Our team also includes post-graduates from world-renowned business schools including the Harvard Business School, the University of Chicago Booth School of Business, University of California, Los Angeles, the Kellogg School of Management at Northwestern University, and Georgetown University’s McDonough School of Business.

We take the responsibility of managing your life savings very seriously, so knowledge is one of our core values. We are lifelong learners and constantly seek knowledge to improve and expand the ways we can serve you.

In addition, Dowling & Yahnke has had an advisor listed on Barron’s Top 100 Independent Financial Advisors for thirteen consecutive years.4

6. DO YOU SELL ANY PRODUCTS?

No, we never have.

7. DO YOU EARN OR PAY REFERRAL FEES TO OTHER PROFESSIONALS TO GENERATE NEW BUSINESS?

No. We are currently not enrolled in any third-party programs to receive new client referrals. When we refer clients to other professionals, such as tax advisors, estate planning attorneys, insurance agents, and mortgage lenders, we do so without accepting any compensation. Our goal in making referrals is to identify trusted professionals that will provide excellent service at a fair cost to you.

8. WHAT IS YOUR FIRM’S INVESTMENT PHILOSOPHY?

The Firm’s investment philosophy incorporates many principles of “Modern Portfolio Theory” which has been thoroughly researched and supported for decades by leading financial academics, including several Nobel Prize winners. Our philosophy emphasizes market efficiency along with the investment factors most impactful to returns over the long-term: risk management, minimizing costs, investing tax efficiently, global diversification, and disciplined rebalancing.
Accordingly, we do not engage in stock picking, market timing, or other active management strategies. We utilize individual securities for the U.S. large cap stock and municipal bond portions of selected client portfolios, primarily to leverage tax benefits. The firm utilizes well-diversified mutual funds and exchange-traded funds to access taxable fixed income, U.S. mid/small cap stocks, non-U.S. stocks, real estate securities, and other asset classes. We have long-term institutional relationships with Dimensional Fund Advisors (over 25 years) and Vanguard, which offer very low cost, tax efficient funds across global asset classes.

9. ARE YOU “ACTIVE” OR “PASSIVE”? WHAT IS YOUR TRADING STRATEGY?

As discussed above, we believe that markets are predominantly efficient in valuing securities. Therefore, we do not pursue technical analysis, market timing, or other active management strategies. We regularly review the research literature in this area, finding that the vast majority of those who engage in active strategies (technical analysis, market timing, stock picking, etc.) underperform the market over long periods of time.

We trade as efficiently as possible to minimize commissions and taxes, which reduce portfolio returns. When we do trade, it is to add economic benefit by (1) raising cash needed to fund the client’s cash requirements; (2) investing excess cash in the portfolio generated by interest, dividends, or new cash contributions; (3) executing tax-oriented trades to save the client income or capital gains taxes; and (4) rebalancing the portfolio to the client’s target asset allocation. In general, our trading volume is highly associated with volatility in the equity markets. Accordingly, we trade substantially more when the markets are down or up sharply to take advantage of opportunities to tax manage and rebalance portfolios (buy stocks when the market is down and trim stocks when the market is up).

10. HOW DO I ACCESS REPORTS REGARDING MY PORTFOLIO PERFORMANCE?

We have made substantial investments in technology including a state-of-the-art platform to provide up-to-date reporting on your portfolio. The DY Dashboard can be accessed any time and many devices – such as your mobile phone, laptop or tablet. Your personalized DY Dashboard provides a litany of reports and analysis regarding your individual accounts and aggregated portfolio. Such reports include investment returns, capital gains and losses, income and dividends, contributions and withdrawals, asset allocation, and much more.

1 Another effective way for investors to compare and evaluate an advisor’s services, fees and conflicts of interests is to review their Form CRS and ADV Part 2 side by side.
2 Discretionary assets under management as of 12/31/2019.
3 Based upon a particular client’s facts and circumstances, the Firm may charge a minimum quarterly fee. See Form ADV Part 2A, Item 5 for additional details.
4Disclosures from Barron’s: The ranking reflects the volume of assets overseen by the advisors and their teams, revenues generated for the firms and the quality of the advisors’ practices. The scoring system assigns a top score of 100 and rates the rest by comparing them with the winner.
Additional disclosures: Barron’s requested Dowling & Yahnke to apply for the ranking. The information for the ranking was compiled by the advisor and may or may not be verified by Barron’s. It is unknown as to the number of applicants considered for the ranking and the percentage of applicants that made the ranking. The award should not be viewed as representative of any one client’s experience and should not be taken as an indication of performance by Dowling & Yahnke and any of its clients. While Dowling & Yahnke did not pay a fee to apply for the award, the firm does purchase goods or services from the publisher of the award (such as subscriptions to the publication, reprints of the ranking, and payment to be included in other Barron’s-published lists).

RELATED ARTICLES

The “Big Three” Financial Adviser Credentials

Read Now
Top 10 Questions to Ask Your Financial Advisor

Doing Due Diligence on Your Financial Advisor Part IV: Your...

Read Now
Top 10 Questions to Ask Your Financial Advisor

Doing Due Diligence on Your Financial Advisor Part III: Finding...

Read Now

OUR TEAM

Discover the people who make Dowling & Yahnke one of San Diego’s top wealth management firm.

MEET THE TEAM

CONTACT US

Our team is available now to discuss all of your financial goals.

SEE INFO