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Posted: March 21, 2011

How to live your lifestyle for a lifetime: Part 2

Choose your adviser carefully

Julie Stone

(Editor's note: This is the second of two parts. Read Part 1.)

Most people are referred to investment advisors by friends or financial professionals. One thing to always consider is your friend's investment goals may be very different than yours, so remember to ask a lot of questions about your specific level of wealth and lifestyle needs and always trust your gut.

Other options are to search online, call branch managers at different investment firms for recommendations, or research by reading articles in magazines or your local newspaper. Different levels of wealth demand the services and experience of different wealth advisors. The priority is to identify a professional you can trust and who will meet your specific needs. The more you trust your investment professional, the more probability you will be able to work with them long-term.

Things to keep in mind during your search:

When choosing an advisor, be wary of advisors guaranteeing a return higher than returns being produced by the capitol market. It may be wise to only hire individual investment managers and investments which are being monitored by a third-party group. This independent group would not be associated with those individual money managers or other investments.

 Monitoring by your wealth management advisor as well as by a third party can add layers of protection to your investment program. And last, but certainly not least, it becomes a high priority to look at the years of experience and the ability of the group that would be doing the monitoring.

What do you get when you work with a wealth management advisor? A family office at no additional cost.

I believe that when you pay a fee to a wealth management advisor, there should be no additional cost to develop the investment plan, to implement the plan with a solid portfolio of diversified investments, to monitor the individual managers and investments, and to support the other professional members on the family team. You suddenly have created a family financial office, at no additional cost, to assist you in running your life.

By working with a wealth management advisor, you can enjoy the peace and quiet of retirement, or spend more time traveling. In my opinion, even if you spend most of your time at your second home, you should feel comfortable that your wealth management advisor will check in by phone and continue to help manage your investments.

What's the best way to safeguard my portfolio?

Once you have your portfolio in place, then the investment advisor's monitoring of individual managers and investments becomes one of the primary safeguards. You may want to consider having part of your investment portfolio remain static and part to remain tactical which will allow the flexibility needed for change as the economy and the global world markets ebb and flow.

I believe that one of the best safeguards for your portfolio is to have a wealth management advisor who understands how to combine individually managed accounts with other investments to achieve a broader diversification.

How to remain a long-term investor and protect your lifestyle for your lifetime:

• To remain in the market long term - think "time in the markets" rather than "timing of the markets."
• Stick to your asset allocation and your diversification plan - this is essential to accumulate wealth.
• Find a well-seasoned investment advisor who will remain close to the needed information on an ongoing basis - this allows you to be more comfortable with enjoying your life.
• Keep in touch with your wealth management advisor to discuss the positive and negative issues currently taking place in the world and how they may affect your portfolio.
• Meet your wealth management advisor quarterly - or at least semi-annually - to remain informed on all of these issues.

When you choose the right wealth management advisor, the relationship you create should be a long and happy one for both of you.
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Julie Stone, CIMA is a vice president and senior investment management consultant at Morgan Stanley Smith Barney in Denver. She has been building solid portfolios for over 22 years.

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