Christopher Lee Sumner-6 Rules Choosing an Investment Advisor

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Six Simple Rules

"Most financial planners are investment advisers, but not all investment advisers are financial planners," stated Chris Sumner, Founder of RS Financial Group. Some financial planners assess every aspect of your financial life—including saving, investments, insurance, taxes, retirement, and estate planning—and help you develop a detailed strategy or financial plan for meeting all your financial goals.

Others call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products, and sometimes products that aren't securities.

Before you hire any financial professional, you should know exactly what services you need, what services the professional can deliver, any limitations on what they can recommend, what services you're paying for, how much those services cost, and how the adviser or planner gets paid.

Is the Advisor a True Advisor?

An independent advisor has the right to reach across company lines and get his or her client the product or portfolio that is best for the client. An advisor that is restricted or who is limited offers what the company he/she works for offers. This is common with the big name Brokerage firms and captive Insurance companies. It is important to understand that when dealing with limited range of financial products, could have an adverse effect on your financial goals.

Does the Advisor Have an ADV Brochure?

Form ADV is the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. The form consists of two parts. Part 1 requires information about the investment adviser’s business, ownership, clients, employees, business practices, affiliations, and any disciplinary events of the adviser or its employees. Part 1 is organized in a check-the-box, fill-in-the-blank format. The SEC reviews the information from this part of the form to process registrations and manage the firm’s regulatory and examination programs. Although designed for a regulatory purpose, investment adviser filings of Part 1 are available to the public on the SEC’s Investment Adviser Public Disclosure (IAPD) website at

Beginning in 2011, Part 2 requires investment advisers to prepare narrative brochures written in plain English that contain information such as the types of advisory services offered, the adviser’s fee schedule, disciplinary information, conflicts of interest, and the educational and business background of management and key advisory personnel of the adviser. The brochure is the primary disclosure document that investment advisers provide to their clients. When filed, the brochures are available to the public on the IAPD website.

Investment advisers are required to deliver annually to clients a summary of material changes to the brochure and either deliver a complete updated brochure or offer to provide the client with the updated brochure. In addition, an investment adviser must deliver to clients a brochure supplement that provides information about the specific employees, acting on behalf of the investment adviser,who actually provide the investment advice to the client. The brochure supplement also includes contact information for the person’s supervisor in case the client has a concern about the person. The brochure supplement must be delivered either before or at the time that the employee begins to provide investment advice to a client. An updated supplement must be delivered to clients when there is new disclosure of a disciplinary event, or a material change to disciplinary information that has already been disclosed.

Before you hire someone to be your investment adviser, always ask for, and read carefully, both parts of the adviser's Form ADV. You can find a copy of the most recent Form ADV Part 2A for Virtue Capital Management and each of our third party sub-advised investment models at

For information about selecting an investment adviser, please read SEC publication, Investment Advisers: What You Need to Know Before Choosing One located at

What Services Does the Advisor Offer?

An Investment advisor should have the ability to discuss investment relates tax issues, assess your risk tolerance and build a total plan for not only your future, but the future of your legacy as well. Risk tolerance, level of income, personal preference, capital needs, children’s future needs, your estate planning, insurance needs and sources of retirement income should all be discussed by your advisor. If these items and more are not discussed, you might need to keep looking for your advisor. Choosing the wrong advisor can mean lost years of your future. Start a plan with the advisor you choose and continue to evaluate your progress. An advisor typically requires an annual meeting with clients.

How Does the Advisor Get Paid

This is an important question to ask anyone you do business, but especially an advisor/ planner.

There are three main ways an advisor gets paid:
1.Though offering commissionable insurance products.
2.Through offering commissionable Securities products.
3.Through charging a fee for creating a financial plan or managing your money.

All three are acceptable, but it is important to know that higher commissioned products can give the planner an incentive to recommend the product to you. An advisor/planner should always discuss liquidity, surrender charges, internal fees, management fees and loads that might be associated with your purchase.

Does the Advisor Accept Fiduciary Responsibility or are they held to a suitability standard?

Deciphering the “What’s What” and “Who’s Who” of today’s complex financial services industry can be difficult, even for the most financially sophisticated members of the general investing public. Two words: fiduciary and suitability, are critical in understanding the motivation behind the person offering you financial products or advice.

Recognizing the difference between the fiduciary and suitability standards may also help you to appreciate the level of care you receive from a trusted financial advisor. Although the distinction between the fiduciary and suitability methods of offering advice is rarely discussed by “broker-led” large financial companies, we feel it is essential for investors to know the difference.


(the suitability standard):

  • Offers products for sale from a range of products carried by the company he or she represents and the suitability guidelines set by said company and FINRA.
  • Is paid commissions calculated as a percentage of the amount of money invested into the product


(the fiduciary standard):

  • Offers “best advice” taking into account the needs of each individual client
  • Is paid a monthly fee calculated as a percentage of the assets under advisement

“What’s What” relates to the standard of care upon which financial advice is provided to the investing public:

The fiduciary standard requires advice to be provided in the best interests of the client including the disclosure of possible conflicts of interest.

The suitability standard states that a broker only needs to check the suitability of a prospective buyer, based primarily upon financial objectives, current income level and age, in order to complete a commissionable sale of a financial product. In a way, when a broker checks the suitability of a potential buyer, they are measuring how much financial product can be sold, not the needs of the investor. No disclosure of possible conflicts of interest is required. Common differences between the two standards involve trading commissions; for example commissions and incentives paid by mutual fund companies back to the broker dealer. These inter-company inducements can create conflicts between the investor’s requirements and the motives of the broker. When a company suggests the purchase of a proprietary product, such as a mutual fund or an inventoried security, such as a bond, in the knowledge they will receive a direct and upfront commission, can that suggestion be relied upon to be fair for the advantage of the client?

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