Need is a critical factor in most of your other purchases, and it plays a direct role in your choice of advisors. If you just don’t want to deal with the hassle of filing your tax return, but you are a basic two-income family with a plain-vanilla earnings picture, you have a lot of choices, but if you are an entrepreneur with head-of-household status, supporting children and parents and wanting to make sure you take advantage of all available tax credits, you’ll need someone who has worked on cases like yours before.
The more advanced your needs, the more you will tilt your decision-making process to getting additional services and paying the full ticket price.
That’s why you start the process with a needs assessment, a self-examination of what you are trying to accomplish, what type of advisor is best suited to help, and what you want in an advisory relationship from that service provider.
This is particularly important in financial services, in which so many products are “sold,” rather than purchased based on the consumer’s knowledge.
No one wakes up one morning and says, “Today, I need to go to the grocery store, fill the tank with gas, and buy a variable life insurance policy.” She might be thinking it’s time to increase her coverage safety net and, perhaps, save some more, but it’s the insurance advisor who pushes the policies. And because variable life policies are not right for everyone, it’s only years later when the person wakes up and starts second-guessing her decisions.
The process is not that dissimilar from when a consumer buys some new technological gadget or doodad, and is pushed into all sorts of features that he doesn’t really know about or need. You don’t want to “pay up” to get features and abilities you don’t need; that’s a waste of money that ultimately will play into how satisfied you are with the advisor.
Knowing your needs and being able to explain them to an advisor will go a long way toward ensuring that you hire people who can remain good advisors for the rest of your lifetime.
There are some advisors you date, and others you marry.
If what you need is a quick fix — you want to write a simple will, you are looking for a one-time portfolio review, you are selling your house and moving away, or you need to answer an unexpected notice from the Internal Revenue Service — you may want to engage an advisor on a one-time gig, getting the job done without much regard for the future.
But if you need help and can see yourself requiring assistance and hand-holding again in the future, then you should look for an advisor you can have the “ideal relationship” with. The ideal relationship between client and advisor ends under one of two circumstances: You die or he or she retires.
Being a serial employer of advisors — where you move from one to the next — is asking for trouble; it gives you more chances to encounter a rogue, and each new counselor may try to prove his or her worth by changing up what you did before, and a constantly changing strategy is the same as having no strategy for reaching your goals.
So while you might be looking for help because of something that is happening “right now” in your life, try to view potential advisors as someone you’d like to call on whenever you need help for the rest of your life.