You may have an attorney and an accountant and possibly a financial planner. If so, you might be getting good advice but it’s your money that all these advisors are working with, so you should make an effort to know what they’re doing. By exercising some basic caution, you can watch out for your own interests:
Choose a quarterback. If you have three or four advisors, they all can’t be in charge. It’s up to you to pick one, who’ll look at the efforts of the other advisors, to make sure they’re not working at cross-purposes.
Read your statements. The advisor who’s acting as quarterback should be preparing financial statements on a regular basis. Ideally, you should be able to see a personal balance sheet–a report of your assets and liabilities.
The liability side of the balance sheet should include a home mortgage, assuming you’re a homeowner. If you see heavy credit card debt or personal loans, you may be overspending.
The asset side of your balance sheet should include everything you own: cash in the bank, stocks, bonds, mutual funds, real estate, life insurance, and so on. Look for a good mix. If 90 percent of your assets are held in technology stocks or technology funds, that’s a red flag.
Get second opinions. Even though one advisor acts as a quarterback, the others should play a role, too. Show your statements to your other advisors, to get their reaction. As long as you’re paying advisors, get their advice.
