There is “no shame in your game” if you ask for help. Managing money is a monumental task. It is time-consuming and often frustrating. While no one is going to care about your money more than you do, it is important to find someone who is going to care about you. The financial services industry employs many dedicated, highly educated, principled, and trustworthy people. So where are they? and how do you find them? Well, that is subjective and just because they have an alphabet of acronyms behind their name, doesn’t mean you should hire them. Here are some things that should really concern you when picking a financial advisor:
- Advisors that find you – Even though practically all financial advisors started this way, an advisor knocking on your door, or cold calling you, should create a moment of pause. The reason? A successful advisor doesn’t have to look for clients. If you consider one of these advisors, please check out the BrokerCheck® reports on the Financial Regulatory Industry Authority (FINRA) website, to make an informed choice. These reports will contain the advisors’ registrations, employment history, and disclosures on disciplinary issues or complaints.
- A messy office – Meet the financial advisor in their office. Take a good look around and notice the details. For example, a messy office with stacks of papers is a warning sign. A clean desk is a clear mind. Think of the clients this financial advisor is exposing. If your statement is on the top of the stack you are exposed to the next potential client or whoever else walks into the office. When it comes to other people’s money, an advisor can never exercise enough care when it comes to clients’ records.
- No questions– An advisor who does not ask you any questions is one you should either hang up quickly on or cause you to make a run for the parking lot and never look back. The simple fact is: financial advisory is a people-driven industry. Without properly understanding your current financial situation, issues, and goals, any recommendation the advisor makes is a potential recipe for disaster. Here is a list of basic questions a prospective financial advisor should ask to earn your confidence in them: Fees– It is like the sign on the wall: “I have no argument with others who sell their services for less. They know what their services are worth.” While it is important to understand the differences in financial advisor compensation, do not get hung up on it. Stay away from self-righteous people who judge someone else’s integrity by how they are compensated. Often, they are projecting their own cynical thinking and motives. Keep your perspective on why you are hiring the financial advisor. A competent commission-only planner who generates consistent returns is far better than a fee-based planner who consistently loses money.
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- How is your health?
- What is your asset/debt relationship?
- Who are you responsible for? Children? Aging parents? Siblings? Etc?
- What type of estate planning have you done?
- Do you expect a future inheritance?
- Are you planning to make any major purchases in the near future?
- What are your retirement plans?
- Do you have insurance?
- Are you planning for a child’s education?
- Fees– It is like the sign on the wall: “I have no argument with others who sell their services for less. They know what their services are worth.” While it is important to understand the differences in financial advisor compensation, do not get hung up on it. Stay away from self-righteous people who judge someone else’s integrity by how they are compensated. Often, they are projecting their own cynical thinking and motives. Keep your perspective on why you are hiring the financial advisor. A competent commission-only planner who generates consistent returns is far better than a fee-based planner who consistently loses money.
- Failure to speak your language – If you have no idea what they just said, it is not you. A good financial advisor will try to determine your financial acumen and speak at your level. It is their job to make complex financial terms and strategies understandable.
- Social media red flags – We live in a technology-driven world and it is easy to research someone’s profile and the various social media website. Take the time to look the prospective financial advisor up on these sites and see what kind of person they really are. Do they reflect your values? Is this a person you would seek out in one of these forums?
Even if you already have a financial advisor, take some time to re-evaluate your relationship with them. Don’t feel like you are offending your advisor by asking questions about your money. You should know exactly what your returns are, what fees you are paying and why, and what the short and long-term investing goals are. Good Luck! And happy hunting!
