Questions to Ask a Financial Advisor

All investors should ask questions of prospective advisors. We have put together frequently asked questions, along with suggested questions from the Securities and Exchange Commission’s own website and answered them in advance. We recommend all your questions are answered to your satisfaction regardless of which advisor you choose.

 
What is FatTail Financial Advisory Group Inc.? We are an independent financial services consulting firm. We serve New York City's five boros and the tri-state area. Our location in Brooklyn, NY is also considered a registered Branch Office of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC and Cambridge Investment Research Advisors, a Registered Investment Advisor. This is referenced on our business cards, stationary and all advertising materials. All Investment Advisor Representatives (IAR) must be supervised by a Registered Investment Advisor and all Registered Representatives must be supervised by a Broker-Dealer. We are different from the “wire houses” and banks in that we do not have sales managers, quotas or a parent company that produces investment banking, or insurance products. However, we have a network of relationships allowing us to offer most financial products including alternative investments and direct participation programs.
 
Where can I find information on Cambridge Investment Research? You can go to www.finra.org or www.adviserinfo.sec.gov as a source of information. Cambridge’s IARD/CRD number is 134139 their SEC number is 801-63930. This is where we started our investigation when we decided to work through Cambridge. We are very happy to be working with them. They make it easy for us to service our clients.
 
What is the difference between a Registered Investment Advisory account and a Brokerage account? Investment advisors have a fiduciary duty to act in the best interests of their clients at all times. Brokerage and other commission-based firms, generally, are not fiduciaries to their customers and as such may not make decisions that are solely in the best interest of their clients.
 
What is your investment philosophy? In general, we believe that core large-capitalization markets are efficient to a great degree but that inefficiencies exist due to market cycles and event risk. We are believers in making use of the new concepts in the field of behavioral finance. Investors and brokers tend to buy (or sell) sectors that are currently “hot” in the market and in the media. They look at past performance rather than what their plans and goals are for the future. We believe this type of thinking is hurtful to the reality of our client’s financial health. We believe that a balance of savings, risk management strategies, asset allocation and diversification is the key to financial fitness.
 
Do you take risks or are you more concerned with the safety of my money? Investment risk is a relative thing, varying from client to client and based on your goals and time frame. We are always concerned about our client’s money. Sometimes we find we are more concerned about it than a few of our clients.
 
How do you define risk? Investment risk is generally defined as the variability of returns from an investment or, with regards to debt instruments, the chance of those debts not being repaid. We believe that when accepting increased investment risk, our clients should be rewarded with elevated long-term returns. We recognized ten different types of investment risk and manage our portfolios based on our assessment of these factors. More importantly, we recognize that our clients face greater catastrophic risks than the risk of loss of principle in their portfolios. Engaging in the financial planning process addresses the life risks associated with loss of income, litigation, premature death, having to provide long-term care for a loved one, and not having a properly prepared estate plan.
 
Do you provide any guarentees? Some financial products do have certain guarentees. They are insurance-based products. Because of their guarentees, there are higher internal costs to those types of financial products. Investments, by definition, flutuate in value.
 
What is SIPC? Your investment accounts where your shares are held by mutual fund companies are covered by Security Investor Protection Corportation (SIPC) up to $500,000 per registration. Any brokerage or fee-based accounts are also covered by SIPC where we can obtain additional coverage up to $50,000,000 for a nominal fee. SIPC does not protect your accounts from market losses. Commodity futures contracts,  currency, as well investment contracts (such as limited partnerships) that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 are not covered by SIPC. SIPC protects your accounts should the mutual fund company or brokerage company go out of business.
 
Describe your typical client. Can you provide me with references, the names of people who have invested with you for a long time? Our average client has $250,000 in investable assets (outside of their business, investment properties, homes and autos). Most have a college education. A high percentage of our clients work in the health care, financial services and teaching professions. As a rule, our client’s identity is confidential. We can provide you with references from other professionals whose clients have worked with us.
 
Is there a product you do not sell? Why? We do not do initial public offerings, mergers and aquisitions and direct venture capital. We do not sell Equity Indexed Annuities. Our Broker-Dealer is not involved in investment banking. If you are in need of these services we are able to refer you to professionals in our network who are capable of providing those services. We have found that Equity Indexed Annuities offer long surrender periods, high commissions for the brokers selling them, poor performance, illiquidity, and high internal costs. We have found other investment vehicles which, when properly structured, provide the same benefits with less cost, greater liquidity and better performance.
 
Have you ever been disciplined by the SEC, a state regulator, or other organization? No.
 
Have you personally been involved in any arbitration cases? No.
 
What is your training and experience? Our founder, Helen Beichel's first exposure to the financial services industry was working on the “800 number” for Keystone Mutual Funds in the mid-1980’s. She has her Masters Degree in International Affairs which has become more and more useful as our economy becomes more globalized. She has been a Registered Representative since 1995. Her professional designation is as a Chartered Financial Consultant™.
 
Do I have choice on how to pay you? Should I pay you by the transaction? Or a flat fee irregardless of how many transactions I have? Yes. We prefer a fee-based relationship with our clients. We will typically recommend changes in your portfolio and financial plan over the course of our relationship. When we make a recommendation we do not want out clients to be thinking,”Why are they trying to sell me this?”
 
How do you get paid? Do you get paid more for selling your own firm’s products? Generally we are paid on a percentage of assets under management or on an hourly basis. We are happy to provide a fee schedule. If a commission-based product fits a client’s situation better we offer this as an option for their consideration. And, no, we are an independent financial consulting firm.
 
How much will it cost me in total to do business with you? It depends on the account size, activity and style of investing. We are happy to provide you with a schedule of advisory fees as well as appropriate prospectuses, Form ADV and/or other expense estimates.
 
Do you make more if I were to buy this stock, bond or mutual fund over another? If you were not making extra money, would your recommendation be the same? This is why we prefer a fee-based (advice-based) relationship. We make the same no matter what we recommend.
 
You have told me how much it cost to buy this portfolio. How much will I receive if I sell it? You will receive the fair market value when you sell it. We do not charge commission on our fee-based accounts but stocks and bonds do fluctuate in value. The price when you purchased will most likely be different when you sell.  When you sell determines the actual rate of return you receive.
 
When do you meet with clients? We meet with clients any time their needs change. If you have a question or concern please call us. On average we meet with advisory clients semi-annually. Clients who are in the process of initially developing their plan(s) or who are doing estate planning will require several meetings depending upon the complexity of their situation and if we have to coordinate meetings with other professionals such as accountants or lawyers.
 
When will I receive a statement? Our advisory accounts receive monthly statements. You will also receive periodic consolidated performance reviews and updates from portfolio strategists with market commentary. We also provide on-line access.

Are you ready to get to work? Visit our special retirement-focused website and then contact us at 718-774-9575 to set up an appointment.