Ronald Reagan made this quote famous when he was president and negotiating over nuclear disarmament with his Soviet counterpart, Mikhail Gorbachev, in the late 1980s. It is, conveniently, a Russian proverb. Reagan repeated it frequently.

Recently, several new clients have come to Old Peak with financial products that just didn’t make sense to own and without products or coverage that they needed. They trusted their financial advisor – but it’s not clear to me that they verified.

If you haven’t verified that your financial advisor deserves your trust, here are five steps to take.

1. Make sure that your advisor is required to act in your best interest 100% of the time. If not, fire them. Our industry’s new trick is to be a fiduciary except when selling commission-based products like annuities and life insurance. That’s a bit like wearing a seat belt only when you don’t need it. The “advisor/fiduciary” takes a supposedly impartial view, concludes you need an annuity, then changes hats and sells you the product which pays them the highest commission.
2. Review the investments you own and ask yourself: Do I understand them? If not, it’s a bad sign. You don’t need to be an expert. But you should be able to identify how much risk you have, why your advisor recommends the products you own, and what fees you are paying. If they use jargon, ask them to rephrase in layman’s terms.
3. Review your insurance and ask yourself: Do I really need the coverage I have, and what – if anything – am I missing? Classic areas of improvement include switching from expensive permanent life insurance to less expensive term life insurance, buying a basic long-term care policy if you could not afford a few years of nursing care, or increasing deductibles on home and auto coverage.
4. Review your estate plan and ask yourself: Is it up to date? Your estate plan includes your last will, health care and financial powers of attorney, and (for many) a revocable living trust. Too often, these documents were created 10+ years ago and no longer reflect the client’s wishes.
5. Confirm that your advisor is on top of these fundamental areas of your financial plan. If not, start shopping.