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New Survey: Investors Choose Financial Advisors for the Wrong Reasons

SEPT. 1, 2006 - In the wake of local investment scandals involving unethical financial advisors, a survey of more than 10,000 investors nationwide shows that 86% of investors don't know how to determine the quality of their advisors before selecting them.

Commenting on the study, Tod R. Arbutina, managing partner of Cottrill, Arbutina Financial Services, and a certified financial planner, said that "One of the biggest problems today is that investors don't know the critical differences between financial planners and financial advisors. They erroneously base their selection decisions on their advisors' personalities and sales presentations. Once they realize their mistake, it's often too late."

The answer, Arbutina says, is for investors to have access to objective data to compare professionals, based on competency, ethics and business practices.

The survey was conducted by Paladin Registry, LLC, a national information services company that the Washington Post said recently is doing "for the financial planning industry what Morningstar has done for mutual funds ... establish a well-known rating service for planners." The Registry is reserved for the top 10 percent of advisors who meet its industry leading admittance requirements.

Arbutina holds a five-star designation in the Paladin Registry , and is profiled on its website. He says that a high percentage of professionals offer both services - whether they have the expertise or not - because of the upside potential for profits, but disregarding the risky downside for clients. He differentiates the two roles as follow:

• Financial planners help investors build strategic roadmaps for their financial futures. This can include the amount of assets they need for retirement, sources of retirement income, and the impact of longevity. The process should produce a strategy that increases the odds of investors achieving their goals.
• Financial advisors help people invest assets. This ranges from investment strategy, asset allocation and manager selection to risk management, investment decision-making, and performance analysis. The primary benefit of the process should be improved asset performance for lower overall risk.

According to Arbutina, investors must learn to obtain objective information from advisors to help them determine competency, ethics, and business practices. Then they can compare professionals to each other and make quality decisions.

About Tod Arbutina - With Big Four experience, Arbutina and his partner Dale L. Cottrill have built one of the largest locally owned, independent CPA and financial services firms headquartered in the Pittsburgh region. Arbutina has been profiled in Kiplinger's "Who's Who of Pennsylvania" for financial planning, and is included in the Guide to America's Best Financial Planners, published by the Consumers' Research Council of America, a Washington, D.C. based research organization specializing in professional services.

About Paladin Registry, LLC - The Paladin website, www.paladinregistry.com, provides free public services to investors who use the services of financial planners and advisors. Its Tips-4-Investors is an educational resource that helps them avoid the risks and consequences of bad financial advice and helps them select high quality professionals. The Registry's two consultant-driven search processes help investors find competent, trustworthy planners and advisors in their communities. And, it's profiling service documents advisor answers to many of the most important questions that investors should be asking advisors before they hire them.

This material is for informational purposes only and is not intended to provide specific advice or recommendations to any individual or group. Before making any financial decisions or commitments, please consult with your financial professional.

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