In last week's column, we talked about the beginning steps for a retiree looking for a new financial adviser, based on a letter from "Barbara." She and her husband were looking for portfolio management and retirement expertise. The need for management leads to a search for a "registered investment adviser." (If you missed the column and would like a copy, write to me at readers@juliejason.com.)

We left last week's column with a promise of questions to ask when you start interviewing firms.

It turns out that regulators have provided investors with a cheat sheet, the U.S. Securities and Exchange Commission's Form CRS (Customer Relationship Summary). The CRS is a short, two-to-four-page document that follows a recipe. The idea is that it's an easy tool to help you compare and contrast firms and the individuals whom you would like to interview.

Among other things, in the CRS you'll see a list of questions the SEC would like you to ask (called "conversation starters"). To me, considering my law experience on Wall Street, one of the most revealing questions is about conflicts of interest and how the firm handles them.

What are some possible conflicts of interest? Advisers might receive higher compensation for recommending one investment over another. An adviser who changes firms could receive incentive compensation that he can lose if he doesn't meet production requirements.

Another question the CRS addresses is whether the firm or adviser has "legal or disciplinary history." If the answer is "yes," the CRS will point you to the SEC's public disclosure site (tinyurl.com/44vfe8hc) that provides additional information. Legal and disciplinary details will give you a sense of a firm's culture. The Financial Industry Regulatory Authority's BrokerCheck site (tinyurl.com/y5vjjzku) will also be helpful in researching this type of information.

The CRS also covers fees. A section of Form CRS asks, "What fees will I pay?" Another asks: "If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?"

As an example, say that a firm charges a yearly fee of 1.25% for managing portfolios of $1 million or less. At that rate, a $500,000 portfolio could pay $6,250. You would want to know if there are other costs or fees that are visible (and potentially invisible).

Before plunging into an interview, make sure you compare a few Forms CRSs to get an understanding of different firms.

This whole exercise is about comparing and contrasting, but you have to start with the big picture, which is the firm. The adviser works for the firm and will adapt to the culture of the firm, not the other way around. Again, I would not start with the adviser. I would start with the firm.

Then, interview the adviser who works for the firm whose culture you identify with. Firm policy and protocols trickle down to the adviser who would represent you. Choosing a firm over a person may have been less important when advisers acted as "customer's men" -- they represented you to the firm. That changed over time after firms started manufacturing and selling their own products to their customers. The good thing is that this information can be gleaned from Form CRS.

In the end, keep in mind that there are a lot of investment advisers to choose from. There are 14,806 investment adviser firms registered with the SEC, according to the 2022 Investment Adviser Industry Snapshot (tinyurl.com/4e4be7ks). Another 17,371 are regulated by the states instead of the SEC; these are smaller firms.

In addition, many of the larger brokerage firms, whose names you would recognize, are "dual registrants," meaning they act as both investment advisers and brokers. In those cases, the broker working for the firm is "dually hatted." However, different rules apply when the broker is acting as such.

If you want to learn more about this subject, I can send you a copy of a sample chapter from my latest book, "The Discerning Investor," which was recently published by, and only available through, the American Bar Association. (Email me at readers@juliejason.com.) Also, you may want to listen to my continuing legal education presentation at Lawline (tinyurl.com/3pm8zbkr), an online learning platform for attorneys.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Are you considering looking for financial advice in the new year?

A reader whom I'll call "Barbara" wants help in finding a new financial adviser.

In her words: "[My husband and I] are looking for a new financial adviser who would monitor and advise us on all the investments we hold. The adviser we currently have is retiring."

Since finding an adviser is an exercise in matching your needs with the expertise of the adviser, don't think that you can find an appropriate adviser by doing an internet search or by choosing a friend's adviser.

Begin with a self-assessment. In this case, Barbara's background would exclude most of the hundreds of thousands of advisers who could be quite appropriate for someone in a different position.

Here are the clues about Barbara's situation:

"My husband and I are both retired for about 20 years, and we are looking for someone who would help to manage our current portfolio. We have had a financial adviser for about 20 years for some of our investments. Others, like our variable annuity and an inherited investment, we 'handled' ourselves. The companies holding these investments did all the investing."

First, Barbara needs help to "manage" her portfolio. That's a key differentiator among investment advisers.

To give you context, I'll share my perspective as someone who started her Wall Street career as a lawyer, and as the author of "The Discerning Investor," an American Bar Association publication for lawyers. Portfolio management is the work of registered investment advisers, as opposed to broker-dealers.

What's the difference between the two regulatory environments, and why does it matter?

As former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton explained: "It really comes down to what you are looking for. ... Do you want someone managing your account on an ongoing basis based on your broad financial goals and needs and movements in the markets? If so, an investment adviser may be best for you. Or, do you plan to buy a few stocks, bonds, mutual funds or ETFs and hold them for the long term with a few adjustments over the years? In that case, a broker[-dealer] may be best for you" (tinyurl.com/mvsn8rdh).

The regulatory differences will guide Barbara to a registered investment adviser.

Second, the size of the portfolio will limit Barbara's choices and the path she would take to actually find the right investment adviser to work with.

The high-net-worth ($5 million-plus) and ultra-high-net-worth ($20 million-plus) may wish to work with firms that limit their client relationships to clientele similarly situated. Why? Higher-net-worth families have more complex financial and legal needs. They will benefit from working with a firm that is expert at dealing with their tax and wealth-related concerns.

No matter the size of the portfolio, the best place to start for some names of potential firms or advisers to interview is your accountant or lawyer. Why? They know you, have other clients like you, and you can expect (but always confirm) that they have done their due diligence before making a referral. (Make sure to confirm that they are not receiving a referral fee for the recommendation, which would pose a conflict of interest.)

Accountants and attorneys (and you) have access to sophisticated due-diligence tools online, which help zero in on conflicts of interest, the most important element of a due-diligence review. Form CRS is the essential starting point. It's a short, easily understood SEC disclosure document that will help compare and contrast firms. (If you would like more information on Form CRS, write to me at readers@juliejason.com.)

What's the bottom line for Barbara?

Given that she needs portfolio management and retirement expertise, she will want to confirm that the adviser is offering both. But, before jumping into interviews, I would highly recommend that Barbara do her own due diligence, starting with reading Form CRSs for prospective investment advisers.

These are the starting steps. If you want help with interview questions, let me know. And, if you want to offer some questions to add to my list, send them to me. If you are a financial adviser, let me know the best questions you've been asked -- and how about some of the worst?

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

2022 was a year of financial challenges for many people, and not just because of market declines, but also because of rising inflation.

The Consumer Price Index (CPI) inflation figure for the 12 months through November 2022 was 7.1%. That's a far higher figure than we've experienced over the last decade.

The rise in inflation actually began in 2021. The CPI was 1.4% for the 12 months ending January 2021, 2.6% in March 2021, 4.2% in April, and has climbed above 5% since then, according to the Bureau of Labor Statistics (tinyurl.com/hwfvfv2c).

The battle with inflation has changed the outlook for many families, as evidenced by Fidelity Investments' recently released 2023 New Year's Financial Resolutions Study (tinyurl.com/5ch78fnc), a survey of 3,020 adults age 18 and older, conducted in October.

Thirty-six percent of those surveyed reported their families were in a worse financial situation than the previous year, while another 36% said their families were in the same financial situation.

For those in a worse financial situation, 58% cited inflation as the reason. A substantial number (43%) ranked "Inflation's impact on day-to-day expenses and savings" as the top financial concern for next year, just ahead of "economic uncertainty/recession" (39%) and "unexpected expenses" (38%).

And among those who experienced a financial setback during the past year, 44% said they had to dip into their emergency fund.

When thinking about the future, 2 out of 3 believed they would be better off in 2023, and another 2 out of 3 were considering a financial resolution for 2023.

Because the timing is right for New Year's resolutions, let me share the respondents' thinking.

The top resolutions were consistent with prior years -- save more money (39%), pay down debt (32%) and spend less money (28%) -- all solid goals.

What was new, however, was a shift from long-term to short-term goals.

For the first time in the 14-year history of the Fidelity study, there was a greater focus on saving money for short-term goals (for example, credit card debt, emergency savings, mortgages and big-ticket purchases) rather than long-term goals (such as retirement, college savings and long-term care).

Planning is one thing; taking action is another. It turns out that more than half of Americans (54% of 1,004 surveyed in September 2022 by Allianz Life Insurance Company of North America) have actually reduced or stopped saving for retirement because of inflation, and 43% said they had to draw from retirement savings due to inflation (tinyurl.com/yt353bwu).

What does this mean in terms of expectations for the future?

The vast majority (more than 8 in 10) of those surveyed by Fidelity believe that having a plan in place "can help them better deal with the unexpected."

If you are a regular reader of this column, you'll know that I wholeheartedly agree. Preparation allows one to anticipate the inevitable down periods in the markets, disruptions in income and emergencies that affect all families.

While only 1 in 3 (29%) surveyed by Fidelity expected that 2023 would be the year of "living sensibly," and only 1 out of 5 (20%) thought of 2023 as the year of "planning ahead," 1 out of 2 (49%) resolved to try to maintain the savings habits they picked up during the COVID-19 pandemic.

Inflation may continue at current levels for a while. And, there may be additional financial challenges on the horizon in 2023. The important takeaway from survey-takers and resolution-makers is to do the best you can under the circumstances. If you haven't made a resolution yet for the coming year, "living sensibly" and "planning ahead" seem to be a good place to start for 2023.

Roughly 1 out of 2 non-retired investors surveyed in July and August (the Nationwide Retirement Institute's Advisor Authority Survey) felt "terrified" about their long-term financial futures (tinyurl.com/25z5c86v). That doesn't have to be you.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION