This certain scenario seems to play out every day across America, and it seems to nearly always create high anxiety and poor decision decisions. The scenario I’m referring to is when one either inherits a significant estate or recognizes that his or her wealth is now at a point where ‘going it alone’ is no longer the best way to manage their financial future. So, this individual recognizes that they need sound financial guidance, but have no idea where to start or whom to trust.
Getting referrals from one’s network of experienced friends and family is a good place to begin, but this help will only narrow a very big field and more work needs to be done. Becoming comfortable with your new advisor, developing clear expectations, being able to communicate easily and without reservations, and establishing a mutual level of trust with your advisor will be paramount to a successful long-term relationship. But how does one do that?
I am constantly amazed when meeting and talking with prospective new clients for the first time. I can certainly ask questions to qualify them for my help, but rarely do I find these people have any idea of how to interview me to learn if I’m a good fit for them. If you can’t effectively interview me, how will you approach the others you have been referred to? How will you make such an important decision that will have such a huge impact on your finances and your future?
So, when I encounter people like these, I try to provide some help. I’ve even created a list of questions I’d want to ask anyone applying for the job of being my trusted financial advisor. I share it here to help any of you, or your loved ones, who are faced with this common scenario.
Questions to ask when interviewing candidates to be my trusted advisor:
- Where did you go to school, what did you study, and what degrees do you have?
- Tell me about your work experience and career in total.
- When did you get into this business, and why?
- What training do you have in financial advice or financial planning?
- Do you have a disciplinary history (customer complaints or regulatory sanctions)?
- How do you start a new relationship, and what is involved with that?
- How do you keep your clients informed, current, and on top of issues that affect them?
- What does your ongoing service approach look like?
- What’s the most valuable aspect of your advice, and why?
- What is your philosophy regarding investing?
- How do you set up an investment strategy, how do you maintain it, and how do you determine when it’s appropriate to change it?
- Do you favor active management of specific investments or an indexed approach, and why?
- What are the limits of your menu of investment choices and other financial products?
- Is there any common financial tool you will not use or recommend, and why?
- Does your firm market proprietary products? If so, how can I be sure you are not inappropriately directing me to those products?
- How do you get paid? Why is that a good system for both of us?
- Do you act as a fiduciary with your clients? Explain how you comply with this status.
- What conflicts of interest would you have in working with me, and how do you mitigate those conflicts?
- How many client relationships do you have, and what is the maximum number you’d ever have?
- How would you characterize your typical clients?
- How long are your typical client relationships?
- Who else in your office/team will be helping me, and what should I expect each person, including you, will be responsible for? Will you be directly involved with me? Explain.
- What makes you, your service and advice, different from other advisors? Why will I be pleased that I decided on you to be my trusted advisor?
- Anything else I should know about you?
Be prepared when searching for trusted financial advice. You can make wise decisions that will serve you well, but only if you understand what you are searching for, what information is relevant and important, and follow a reasoned process. Best of luck with your searches and please reach out if I can answer any questions.