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How to Choose Your Financial Advisor. Are You The Right For Me?

Exploring these 3 areas of questioning

Choosing the right financial advisor is one of the most important decisions you can make. Particularly for those who are getting close to retirement, you’ll want to find an advisor who understands your specific needs. But you will also want to know a great deal more about an advisor before making your choices. With that in mind, we polled our panel of advisors to share their ideas for the most insightful questions to ask in evaluating a potential relationship. Their ideas fall into three core categories:

1. Make certain your advisor is a fiduciary.

The starting point should always be your advisors’ credentials. If the advisor cannot attest that they are sworn to act always in your interest, then there is no reason to continue the discussion.

cpc 1“The first question you need to ask a prospective advisor is whether or not they have a certification” says Christopher Calabro, CFP®, CEO of CPC Financial Group. “Certain designations such as the “CFP®” means that your advisor is held to a strict standard of fiduciary duty, meaning they must put your financial best interest ahead of their own.”

Closely related, continues Calabro, are questions to further establish that the advisor will be providing unbiased suggestions. To learn more about the provider’s affiliations and directives, ask about fee structures and whether or not “the advisor works with proprietary products and sales quotas,” says Calabro. “You want to walk away from the meeting with a sense of trust that you can lean on your advisor and that they will remain objective when you need them the most.”

Carolyn Larsen-Wieber, CEO at CLW Financial Planning LLC agrees and recommends always beginning the conversation with: “Are you a fiduciary?” Brokers, she explains “operate under a standard of care where they are required to prove only suitability for the products they’re recommending.” Fiduciaries, on the other hand, are held to a higher standard of care,” says Larsen-Wieber.

2. Make certain the advisor gives you a sense of comfort and confidence.

Chemistry is an essential component of the financial advisor/client relationship.

Nickelbo“Meeting with a financial planner for the first time can be very intimidating as finances are really not discussed openly, ever” says Nicholas A. Ibello, CFP®, AIF®, vice president of wealth management at Williams Asset Management. “People are keener to discuss sex and politics than they are their cashflows and retirement.”

This sense of discomfort is both natural and common, particularly the first time you are meeting with a financial planner. But once you’ve established their credentials and status as a fiduciary, the next relationship element you should be seeking in that initial discussion is whether or not they imbue in you a sense of comfort and openness.

As Ibello explains, the right advisor for each of us is someone who can “create an environment of space and trust to facilitate efficient and powerful financial conversations.” By “powerful,” Ibello means that if you and your financial advisor can achieve a state of deep communication and trust, the financial advisor will obtain a clearer understanding of who you are, the state of your current finances as well as your wants and needs in retirement. They will also want to learn all they can about your risk tolerances and capacities.

The greater the honesty and intimacy, the more your advisor will know how to do their work. All of this leads to greater effectiveness and appropriateness of the wealth and retirement plan which ultimately becomes a close collaboration. The relationship should be so close, Ibello likens it to a marriage.

“Your advisor will be with you for a very long time: through the ups and the downs and major life transitions like birth of your grandchildren, death of a loved one, a new home.”
Your relationship with your advisor must be open and intimate.

3. Ask questions that zero in on your specific needs.

They’re a fiduciary, so you won’t need to worry about whether or not you’re being shown products and services that meet your needs to accomplish your goals. The fee structure is standard – you’re not being over- or undercharged.

You’re also confident that you’re feeling comfortable with the advisor – so that when the time comes you would be willing to share the most intricate details of your spending and finances. Now it’s time to gauge the fine points of whether this is a fit.

Here, Robert L. Kilroy, CLU, CFP® at Point Wealth Management suggests being well-prepared with a laundry list of key questions that can provide deeper insight into the quality of the match. Some of the most pertinent include:

  • “What are the advisor’s philosophical beliefs regarding investing and wealth management?”
  • “How many clients do they manage?”
  • “What is the composition and skillsets of their team?”
  • “What is their value proposition?”
  • “Can they describe their ideal client?”
  • “How would their best client describe their advisor?”

Drilling deeper

From this platform, Bridget Riley of Riley & Higgins Associates LLC offers a handful of pointed questions that should lead to invaluable insights regarding the pairing.

BridgetIn the first of these she asks: “Do you have many clients who are in a similar financial situation as I am?” Riley insists that “you want to be certain you’re getting a financial advisor who is comfortable and very familiar with your specific pain points and financial needs.” This can be especially important for those getting close to retirement, a group whose needs are very different from those just getting started in the wealth management journey.

Next, “a great question – that nobody asks – is how long have your worked with your longest client?” says Riley. “That is a very revealing question that tells quite a bit about the advisor and how they treat their relationships.”

Third, “What can you do to help me minimize my taxes in retirement?” asks Riley. “Taxes are the biggest drag on your retirement. You need someone with strong tax expertise who can minimize your tax and thus increase your bottom line.”

Finally, “What does becoming a client look like?” says Riley. She suggests insisting the advisor walk you through the process of client onboarding; how often will you meet; what reporting and access you can expect – if you agree to become a client. As Riley explains, “this can prevent disappointment from unmet expectations on both sides.”

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