In Search of the Right Financial Advisor

Lisa Knott |

The challenge for many people today is finding the right financial advisor. The sheer number of financial professionals holding themselves out as “financial advisors,” makes it a daunting task at best. It is easier if you know what to look for, but that requires an acute sense of what exactly you want from an advisory relationship.

What exactly do you want?

When shopping for a new car, many people know, down to the miles per gallon, what they are looking for in features, safety standards, passenger capacity, and engine output. But the final determinant in a car purchase is the emotional connection the buyer has with the car and how it reflects the buyer’s character, attitudes, stature and general outlook on life.  A buyer knows he has made the right choice in cars, not at the moment of purchase, but daily as they slide into the driver’s seat and turn the ignition key.  What makes that possible is the constant reinforcement of value that produces a daily emotional payoff.  Should clients with millions of dollars of assets to protect expect anything less from their advisory relationships?

In the realm of investment advice, value is defined by what you receive from your advisory relationship that meets or exceeds your expectations. For most clients, it has much less to do with pricing or investment performance, than it has to do with the fulfillment of promises and commitments made at the outset of the relationship.  But the commitments will only have value if they are based on your stated needs and expectations.  So, unless you need to clearly articulate what you expect.

  • You want conflict-free advice.  You will need to ascertain if the advice you are receiving is tied to the sale of any specific investment product.  Does the advisor have the ability and the willingness to shop the street for the lowest-cost alternative or is he limited to a fixed range of options?
  • You want to ensure that you receive truly authentic advice. So you will need to know under what financial, economic and investment principles was the advice formulated. Is it grounded in sound theory, or is it based on the advisor’s own frame of reference?  Is the advisor academically trained or is he simply product trained? What are his credentials, both educational and professional?
  • You must have transparency and should   know how recommended investment products are priced, and how your fee or commission is applied in the cost structure.  Who receives compensation for your investment purchase, how is it determined, and how is it disclosed?
  • Your interests should be served and not those of the advisor or the firm. The advice or investment recommendation should not be given in pursuit of a win-win-win; rather that it is based solely on a win for you.  Ask to see if the advisor operates exclusively under a fiduciary standard of care?
  • If you seek greater responsiveness, and more timely communication, then you will need to know about the methods and frequency of communications, portfolio reporting, client contacts, and client reviews. How quickly will your calls be returned, and will they be returned by the advisor or by a staff person?
  • One needs to take into account the expertise or resources the advisor has in all of the financial disciplines, including tax, estate, business and retirement planning. Does he have access to a team of seasoned professionals, or will he rely on his own capacity to address all of these disciplines?
  • You should ask what the advisor does to stay current in the field and to acquire advanced knowledge. Has he earned any professional designations? What are their requirements for continuing education?
  • Lastly you need an advisor who is also a coach; someone who is not afraid to confront you when your emotions get the best of you. You need to find out how the advisor coaches his or her clients.

The expertise and resources that a qualified financial advisor brings to bear in dispensing solid, objective financial advice can be invaluable.  The universe of financial products is so vast that it is beyond the scope of most people to narrow down the choices to the ones most suitable for your particular situation. An objective financial advisor should not only strive to save you a tremendous amount of time and worry, but will ensure that your best interests are always placed above all else. 

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.