Copyright Forbes
Here are the most common complaints I hear from new clients about their former financial advisor: I don’t understand a word he says (most advisors are male). I feel like he’s always talking down to us. I hate going to the meetings; it makes me feel like a failure. He only talks to my husband. We never hear from him unless he’s selling something. He doesn’t understand how important traveling is to us. He never listens; he just talks and talks. These are all red flags. If you nodded to one or more of these statements, your current advisor probably isn’t well-suited to you. So how do you find a “good one”? Interview a bunch as you would for any hire. Remember, this person will work for you. Assess them in the following four categories. (And if you’re married, do this together.) Competency I recommend interviewing Certified Financial Planner® professionals. The Financial Industry Regulatory Authority (FINRA) maintains a database of 253 financial designations. However, the CFP requires at least a bachelor’s degree from an accredited university, completion of eight master’s-level classes, passing a six-hour, 170-question exam, having 4,000 to 6,000 hours of professional experience, adherence to a code of ethics, and completion of continuing education. To find a CFP in your area, visit https://www.cfp.net. Honesty/Ethics Make sure that your advisor is never the custodian of your money. For example, I serve as the advisor, but Raymond James, a financial services firm, is my custodian. All my trades go through them. They provide an entire system of checks and balances to keep me honest and my clients’ money safe. Remember Bernie Madoff and his Ponzi scheme? He was the advisor and custodian. To see if an advisor has ever run into regulatory trouble, visit https://brokercheck.finra.org. Philosophy Is the advisor you’re considering independent, or do they work for a company or organization? If the latter, are they limited in the investment options they can provide? I personally prefer independent advisors who have the freedom to offer investment options that are best for clients. My business is also fee-based rather than commission-based. I want to be on the same side of the desk as my clients; when they prosper, I prosper, and vice versa. Beyond all that, I recommend asking, “What impact do you think emotions have on financial decisions?” If their answer is none, run. Personality This really comes down to chemistry and whether you click with the advisor. By that, I mean, if you have a sense of humor, do they have one, too? If you hate charts and graphs, can they work around that? And most importantly, are they genuinely interested in you as a person, keeping the conversation focused on your goals and emotions rather than on what they did last weekend? Oh, and if they’re wearing Armani and you’re in last year’s Target, maybe you’re not the best match.
