Wednesday, September 19, 2007

Verifying Your Financial Advisors Advice - Service provides watchdog for investors

See article @

This is an interesting idea (follow article link above or see excerpts below). I think there might be some other ways of implementing this that could be even more useful but I certainly agree with the sentiment. And, for the price, it's a cheap second look at things to make sure you are not entirely getting simply "told a line" by your broker, financial advisor, financial planner, etc. while still being more formal than getting your friend "Bob" to take a quick look at your portfolio. Mostly what caught my eye was seeing another way for more folks to easily get a second set of eyes looking at their portfolio, ideally in a quasi-independent and professional manner, especially without the hired trying to take a big bite out of it themselves.

While it's not stated outright, it sounds like he's doing Monte Carlo simulations, so he's contrasting ones existing portfolio with a group of model portfolios of various supposed styles that have been back tested with historical data to supposedly ascertain their "risk". (The more mysterious part, at least to me, is just how to ascertain an individuals "risk" tolerance, which can be taken to mean many different things -- and whether that is even as relevant as the size of their portfolio relative to their overall net worth and their timeline for needing the principal back, but that's a digression for another day).

To compare this with another industry, this service is a bit like the automated security scans from the likings of ScanAlert (with the green "Hacker Safe" shield logo) that IT folks responsible for e-commerce sites have grown accustomed to. The results can be useful, sometimes annoying, but they also just might not mean anything. You still need to know their basis and how to interpret them for your particular environment.

Anyhow, it's not a perfect method but it's a start.


David Donaldson plans to revolutionize the investment industry by bringing accountability to financial advisers.

“I just can’t stand when I see people who are individual investors who get taken advantage of,” Donaldson said. “My goal is to be kind of a watch dog to make sure financial advisers are doing their job.”

On Aug. 27, he announced the launch of Advisor Check, a service that analyzes investment portfolios so that individual investors can see whether their financial advisers and asset managers are addressing their personal investment goals. Donaldson is the managing director and senior portfolio analyst for Advisor Check.


“It turns out what we found is a majority of people really want someone to give them a second look at their portfolio, but are afraid that if they go to someone else like a financial adviser, they’ll just be told what they want to hear,” Donaldson said, adding that he rushed to launch the service officially because of the current volatility of the market.


“I would say that about 79 percent of the portfolios we look at are improperly allocated and expose clients to more risk than they actually need to be taking,” Donaldson said.

Donaldson offers his clients an unbiased, third-party analysis. In order to avoid any conflict-of-interest, he does not offer advice or sell any services beyond a comprehensive portfolio analysis.

“If anything, it gives [investors] the ability to ask the right questions” of their advisers, he said.

“It gives financial advisers – if they do a good job – a lot of kudos for what they do, but if not, it’s a good reality check for them,” Donaldson said.



Unknown said...

Advisor Check is quickly becoming more of an advocate for the individual investor.

Unknown said...


Thank you for the recognition. Yes, our analysis contains a monte carlo simulation but we also have a proprietary template that we follow. The most difficult aspect of creating this report was making it simple to read and understand for the average Joe. The report is meant to uncover potential questions about their portfolio that should be addressed with their advisers.

Overall, Advisor Check is an advocate for the individual investor. We attend seminars to monitor what is being said to investors as well as lobby for investors’ rights. Financial Advisers have their own organizations that credential them and give them fancy initials to put at the end of their names, but at the end of the day it is the Advisor fees that support the association.

We are continuality adding information to our website and have new members joining everyday. I believe at this point we are the fastest growing individual investor advocate association in the U.S.

To become a member or more information visit:

Best Regards,

David Donaldson
Managing Director
Advisor Check