They say that beggars can’t be choosers. Well, you’re not a beggar. You have sizable assets that need professional management. If there ever was a time to be extraordinarily choosy, it’s now. But, like any great search in this life, let it start with the classic adage Know thyself.
Before you begin the search and interview process for selecting a financial advisor, make an inventory of your own personal needs. Define the amount of support you need in terms of time, frequency of contact, and advising style.
Do you prefer to accept advice from a professional who mirrors your own image? Or will a sage advisor with a completely different life experience offer you the comprehensive perspective you crave? There may be a trade-off between baseline relatability and a sense of wisdom you’ve not yet achieved in life. Both offer unique forms of financial insight but in vastly different packaging.
Now, let the games begin.
• Services Offered: Financial advisors offer an array of services. Are you interested in long-term comprehensive planning, retirement and estate plans? Or do you need an advisor who can put you on the path to reach shorter-term goals? Do you need a full-service advisor who can outline a plan and then complete the related investment transactions? Or are you willing to enact the plan yourself?
• Fee Structure: Financial advisors are generally compensated in one of two ways: commissions from the sale of investments, or by a fee-only structure paid by the client directly. Understand the difference between the two structures and how they may affect the investment options presented to you.
• Experience: What kind of industry experience does the advisor have? Do they specialize in serving high net worth individuals? Do they focus on serving a specific industry? Does the advisor have a proven approach and successful track record servicing clients in a similar life stage and with a similar portfolio size as yours?
• Advising Style: How accessible will the advisor be? Will they accommodate regular questions or will check-ins be limited to an annual review of your account? Make your preferences clear to your prospective advisor.
• Measuring Performance: Evaluate the financial advisor’s performance using qualitative and quantitative measures. Review their client retention record to gain insight into the quality of their services. Satisfied clients will remain with the same advisor year after year; over decades and often across generations. While no financial advisor can guarantee market performance, ask what quantitative market benchmarks will be used to monitor and adjust your plan over time.
• References: Perform both personal and professional credential checks. Your advisor should be able to provide you with a list of several clients. Your discussions with them will give you insight into the level of service you can expect. Financial industry credentials and licensures take the form of a large number of acronyms that follow your prospect’s name. In addition to verifying their education, take time to validate their professional credentials. They may be certifications or designations; research each one and understand what it means to you as a client. (Examples include Certified Financial Planner, Personal Financial Specialist, Registered Financial Consultant, etc…)
IncBlot is a consultancy that specializes in applying the field of psychology specifically to the world of financial services. Please be in touch if we can assist with your training, speaking and consulting needs around behavioral finance, practice management or a host of other topics.