Important considerations when deciding on an investment advisor to manage your money

considerations when deciding on an investment advisor
Kevin Wenke

Kevin Wenke

CFP | CLU | Investing | Insurances | Taxes

Accumulating wealth is not easy, and it often takes years of hard work, sacrifice, and perseverance to build up a sizeable portfolio. For many people, and likely you since you are reading this right now, your wealth represents your hopes and dreams for the future, a way to achieve financial security and freedom and live the life you truly desire. 

But managing this wealth can feel challenging, especially as the investment landscape seems to evolve and becomes more complex. That’s where an investment advisor comes in – someone who can help you navigate the markets and make informed decisions about your money.

There are thousands of investment advisors out there who would be happy to manage your money. But what should you look for when hiring an investment advisor? What questions should you be asking?

In this article, I will explore what I feel are the key considerations when deciding on an investment advisor to manage your money. 

What Has The Investment Advisors Performance Been In The Past?

One of the most important factors you will consider when choosing an investment advisor is their investment performance. After all, the primary goal of investing is to grow your wealth over time. You want an advisor who has a proven track record of delivering consistent returns that meet or exceed your expectations. Of course, past performance is not a guarantee of future success, but it can give you an indication of the advisor’s investment strategy and approach.

When evaluating an advisor’s performance, it’s important to look beyond the raw numbers. Too many investors look at just historical returns to make a decision and that can be a mistake!

For example, an advisor may have achieved impressive returns over the past year, but if they took on excessive risk to do so, it may not be sustainable over the long term. The averages always work themselves out…

 Likewise, an advisor who seems to consistently underperform their benchmarks may not seem to be adding much value to your portfolio but they may be more consistent and not have as many “ups and downs” as the investment advisor who takes more risk.

So What you should do

Instead, look for an advisor who has a well-defined investment philosophy and a clear strategy for achieving long-term growth. If they are going to invest your money to take advantage of the appreciation stocks experience over time, this philosophy might include a diversified portfolio of assets that aligns with your risk tolerance and financial goals. Whoever you choose, the advisor should  be able to explain their investment approach in plain language, so you can understand how your money is being invested.

Risk Management - What is The Best and Worse Case Scenario?

While investment performance is important, managing risk effectively is equally important. After all, investing always involves some degree of risk, and it’s important to have a plan in place to mitigate potential losses. This is particularly important for affluent investors, who have more at stake and maybe more risk-averse than other investors.

When evaluating an investment advisor’s approach to risk management, it’s important to consider both the best-case and worst-case scenarios. A good investment advisor should have a well-defined investment philosophy and a clear strategy for managing risk in different market conditions. They should be able to explain their approach to risk management in detail and demonstrate how they have navigated past market downturns.

For example, when evaluating an advisor’s track record during market downturns, you may want to ask questions such as:

  • How did they handle the market volatility of 2008-2009?
  • Did they make any changes to their portfolio to minimize losses?
  • How did they communicate with their clients during this time?

These questions can help you understand how the advisor approaches risk management and how they might handle future market downturns.

It’s also important to consider the potential upside when evaluating an advisor’s risk management approach. For example, do you feel confident that no matter what will happen in the markets, you will be OK or do they leave you exposed where the worse possible scenario is you could lose ALL your money if the financial system collapsed?

There is a balance to be found. Some advisors may take an overly conservative approach to investing, which may limit your potential for growth. On the other hand, other advisors may take on excessive risk in pursuit of higher returns, which can be dangerous if market conditions change. A good advisor should have a system where you have maximum upside potential with a level of security that protects your wealth if something happens like what happened during the 2008-2009 financial crisis.

What are you paying for and what will you receive

I hate getting ripped off, and I would be willing to bet you do too…

Costs are an important consideration when choosing an investment advisor, as fees can significantly impact the overall return of your portfolio. Many advisors charge a percentage of assets under management (AUM), typically ranging from 0.5% to 2% per year. While this fee may seem small, it can really reduce to your investment returns over time.

For example, let’s say you have a $1,000,000 portfolio, and your investment advisor charges a 1% yearly fee.  Assuming an average annual return of 7%, your portfolio would be worth approximately $7.61 million after 30 years without the fee. With the fee, the portfolio would be worth approximately $5.74 million, a reduction of $1,867,000 or over 24% of the portfolio’s value.

Of course, fees are not the only consideration when choosing an investment advisor. All things considered, you would happily pay an advisor who can consistently earn a 10% return while taking the same or less risk than the advisor earning just a 7% return, right? That is why it is important for you to understand how the advisor is generating your return.

A good advisor can add value in other ways, such as providing financial planning services or helping you make informed decisions about your investments. However, it’s important to be aware of the fees you are paying and to make sure that they are reasonable relative to the services you are receiving.

If your advisor is “index investing,” then it may be better to pay them a lower fee to have them manage your money, and then you can pay them an hourly or flat fee when you need additional services.

Communication and Transparancy

Finally, communication and transparency are key factors to consider when hiring an investment advisor. You want an advisor who is accessible and responsive to your needs, and who can provide regular updates on your portfolio’s performance. This includes both good news and bad news – you don’t want an advisor who only communicates when things are going well.

To break it down in simple terms – you want someone you trust and enjoy working with!

Transparency is also an important consideration when deciding on an investment advisor. You should clearly understand the fees you are paying for the advisor’s services, as well as any potential conflicts of interest that may exist. For example, some advisors may receive commissions for recommending certain investment products, which may not be in your best interest. Look for an advisor who is transparent about their compensation structure and who is committed to acting in your best interest at all times.

Other Considerations When Hiring an Investment Advisor...

While investment performance, risk management, communication, and transparency are typically the top priorities, there are other factors to consider as well. Tax efficiency, estate planning, and social responsibility are all important considerations when deciding on an investment advisor for affluent investors who want to minimize their tax burden, plan for the future, and align their investments with their values.

Tax Efficiency

Tax efficiency is an important consideration for affluent retail investors who want to minimize their tax burden while maximizing their investment returns. A good investment advisor should have a thorough understanding of the tax code and be able to recommend tax-efficient investment strategies that can help you save money on taxes over the long term. Some tax-efficient strategies to consider include:

  1. Tax-Advantaged Accounts: Investing in tax-advantaged accounts, such as 401(k)s, IRAs, and Roth IRAs, can help you reduce your taxable income and grow your investments tax-free. These accounts offer a range of tax benefits, such as tax-deferred growth or tax-free withdrawals, depending on the account type.

  2. Asset Location: Asset location refers to the placement of assets in different types of accounts based on their tax characteristics. For example, placing tax-inefficient assets, such as bonds or high-yield stocks, in tax-advantaged accounts can help you reduce your tax liability and increase your after-tax returns.

  3. Tax-Loss Harvesting: Tax-loss harvesting involves selling investments that have declined in value to offset gains in other parts of your portfolio. By harvesting losses, you can reduce your taxable income and potentially increase your after-tax returns.

Estate Planning

Estate planning is another important consideration for affluent retail investors, as it involves ensuring that your wealth is passed on to your heirs in a tax-efficient and orderly manner. A good investment advisor should be able to work with your estate planning attorney to develop a comprehensive plan that addresses your individual needs and goals. Some estate planning strategies to consider include:

  1. Trusts: Trusts can help you transfer assets to your heirs while minimizing your estate tax liability. There are several types of trusts to choose from, depending on your individual needs and goals.

  2. Charitable Giving: Charitable giving can help you reduce your taxable estate while supporting causes that are important to you. There are several ways to make charitable gifts, such as setting up a donor-advised fund or making a direct gift to a charitable organization.

  3. Business Succession Planning: If you own a business, it’s important to have a plan in place for transferring ownership to your heirs or other successors. A good investment advisor can work with your business attorney to develop a plan that minimizes tax liability and ensures a smooth transition of ownership.

Social Responsibility

Social responsibility is becoming an increasingly important concern for affluent retail investors who want to align their investments with their values. A good investment advisor should be able to help you identify investment opportunities that are socially responsible and that align with your individual values. Some socially responsible investment strategies to consider include:

  1. ESG Investing: ESG stands for Environmental, Social, and Governance, and refers to a set of criteria used to evaluate the sustainability and social impact of companies. ESG investing seeks to invest in companies that have a positive impact on society and the environment.

  2. Impact Investing: Impact investing involves investing in companies or funds that have a measurable social or environmental impact, in addition to generating a financial return. Impact investors seek to make a positive difference in the world while also achieving their financial goals.

  3. Shareholder Advocacy: Shareholder advocacy involves using your shareholder rights to influence corporate behavior on issues such as environmental sustainability, social justice, and corporate governance. A good investment advisor can help you identify opportunities for shareholder advocacy and work with you to make your voice heard.

How we manage wealth at Decision Tree Financial

At Decision Tree Financial, we’re committed to helping our clients achieve their financial goals through a comprehensive and personalized approach to wealth management. That’s why we’ve developed a proprietary investment strategy called The SALLO Strategy, which stands for “Stable Assets Leveraging Life and Options.”

Here’s how our SALLO strategy works:

Stable Assets: We focus on investing in stable, income-generating assets, such as dividend-paying stocks, bonds, and real estate investment trusts (REITs), but we may recommend our clients place a majority of their money in 100% guaranteed US Government Treasuries.

By prioritizing stable assets, we help our clients protect a large portion of their portfolio so that it generates steady, reliable income while we take risks to generate returns in other parts of the strategy.

Leveraging: We use leverage to get more done with less. 

Life: When appropriate and available, we are able to leverage the cash value of permanent life insurance to generate safe returns while utilizing the insurance benefits afforded by the policy to enhance other areas of your financial life. Life insurance can provide insurance benefits for long-term care, and the death benefit can be leveraged to maximize pensions and social security or to replace other assets that can be spent and enjoyed so you can leave a legacy to your family or favorite cause if that is a wish.

The life policy’s cash value can be used as an income or borrowed against to take advantage of investment opportunities when they come up.  Before this product is used, we take a holistic approach to wealth management in our Financial Freedom Process that considers our client’s entire financial picture, including their values, goals, risk tolerance, and lifestyle. This means that we work closely with our clients to develop personalized financial plans that are tailored to their unique needs and circumstances.

Options: Many of our clients are shocked when they realize you don’t have to risk ALL your wealth to earn market returns. In fact, at any given time, all you have to put at risk is 15% to earn market-like returns. This is all done through the use of stock options…

We use options strategies to “index invest” to generate returns and manage risk.

When the stock market roars higher, the money allocated to options increases by around 10x more than the market. So, if the stock market were to increase by 50%, the options increase in value by 500%!

However, the stock options become worthless if the stock market falls 50%. This is a small price to pay in the big scheme of things because, remember, the other 85% of your wealth is sitting in safe, stable assets like US Government Treasuries and cash value life insurance, meaning that no matter how far the market falls, the maximum amount you could lose is pre-determined so you never have to worry about losing it all if the stock market collapses. 

Our SALLO strategy is designed to help our clients achieve their financial goals while minimizing risk and maximizing returns. Our fees are…

are you ready…

a flat 1-hour fee per year for this management.

When it comes to investing, we believe there are better ways to generate returns than putting all of your money at risk. We want to position our clients where the odds are in their favor to win, but they are never at risk of losing more than they can handle if things don’t go as planned…we believe if the stock market is like a casino, it is better to take bets like ‘the house” than to be a gambler trying to beat the odds.

If you would like to learn more about our investment strategy, head over to and attend our presentation.

If you are looking to hire an investment advisor who has your best interest in mind, you want an advisor who puts you in a position where you have unlimited upside potential, risk management, low fees, and is 100% transparent.

Again, head over to and learn more.

I hope this article served you and I look forward to seeing you in my presentation at invest like the

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