Are you shopping for a new advisor?

Insight from industry insiders

You’re nearing retirement, everything is going just fine and then out the blue, the pandemic strikes, the economy spins and sputters, energy costs surge and broad based inflation strikes. Do you still trust your financial plan? Are you confident you have the right advisor to steer your retirement into its glide path? Or like many others, will you be second-guessing your source for financial stewardship?

In their report “Why Investors Switch Advisors” researchers at the Spectrem Group point out that retaining the same financial advisor throughout one’s lifetime is the exception, not the rule. That is, only 42% go the distance relying on a specific provider.

The key question for such a change: why? The most frequently cited include lack of timely communication from the advisor (24%), a lack of compelling advice or ideas (23%) or the perception – or reality – of sub-optimal investment performance (22%).

If your advisor is stepping up to the plate, providing you with sound performance, timely updates and giving you confidence, you’re in luck – you’re likely working with the right team. But investors experiencing any sense of distance, mismatch, anxiety or general lack of alignment with their current provider may no doubt be on the lookout for someone new. With that in mind, here’s some fresh advice from the industry.

In whose best interest?

Daniel Colvin is a financial advisor with Fiat Wealth Management in Wayzata, MN. According to Colvin, his team will begin any first meeting with a series of questions – a means of getting to understand a prospective client’s unique needs and values. But from there, it is important that clients are ready with questions of their own. Here, Colvin says two question in particular are vital.

DcolvinThe first, says Colvin, is "Are you a fiduciary? The term ‘financial advisor’ is used too loosely in the industry. However, a fiduciary is legally obligated to do what’s in the best interest of the client. Interviewing a new financial planner, it is vital that you begin with that simple question.”

The second question, Colvin continues, “is what is your would-be advisor’s why? When we make the decision to partner with a client, it is far from a transactional event. When forming a long-term relationship it’s important to know who someone is as a person. In order to know if that advisor is the right fit, it’s vital to understand what motivates them and why they are in the industry.”

In Colvin’s case, the “why” leads to an intriguing story. This advisor grew up playing ice hockey in New Jersey eventually landing in Division I playing for the US Military Academy at West Point. It was after graduation during his five years of service as an officer that Colvin began to recognize how sound financial planning and management can impact work and life. Poor financial decisions among his soldiers led to a lack of focus and confidence and that led to poor individual and team performance. So, Colvin made it a point to begin teaching personal finance to those in his charge. Teaching as he advises, enabling his clients to fully understand ‘the plan’, remains his passion today.

How are we balancing risk and return?

Shelly Cote Olson is the Director of PR & Marketing at New Frontier Advisors, LLC, a Boston, MA-based provider of financial technology for financial advisors. Amid so much financial disruption and rising inflation, Cote believes it is more important than ever for investors to learn how well their advisors understand personal investment objectives. Moreover, an advisor should be helping their client to understand how risk relates to varying investment strategies. So the question to ask any potential advisor is: what is your approach to performance and investment risk?

Shelly Olson 2Here Olson’s firm has developed its own proprietary Asset Allocation technology. According to Olson, “this includes a Portfolio Choice Tool to help Advisors with real-time, interactive exploration of a suitable level of portfolio risk for meeting long-term investment objectives given a wide variety of cash flow projections and scenarios. Unique to our firm, we employ a patented process, Michaud Optimization, one of our key innovations, to produce realistic projections geared to sound planning for advisors and their clients.”

New Frontier’s website describes its technology as “a comprehensive solution for institutional quality portfolio management and investment decision making.” Various modules provide “guidance about when and how to trade,” as well as “project long-term outcomes of investment decisions.”

While this is a sophisticated trading system – the point becomes, be certain to ask your advisor about the technologies and methodologies they are using to manage your assets. A good advisor should be able to clearly explain their investment approach and in particular, the interplay of risk and return within their core strategies.

What if your advisor leaves?

Determine if your advisor is a fiduciary; figure out their professional motivation and determine whether it’s a match for your needs; understand how they will invest your assets and make certain their approach aligns with your risk tolerance: all good questions.

But according to Paul C. Ragone, an Accredited Wealth Management Advisor (AWMA) and Accredited Asset Management Specialist (AAMS) as well as President and Wealth Manager at Integrity Wealth Services in Knoxville, TN, there’s one more question to consider.

Paul Ragone 1“Having started with a captive firm before quickly transitioning to becoming independent, the absolute first question I would ask a financial professional would be: What happens to me as a client if you as my advisor move to a different firm?”

According to Ragone, “I believe most prospective clients have done some degree of research on the financial professional before the first meeting so the answers to the most common questions are probably already known. But what most prospective clients don’t realize is that if the financial professional works for a captive firm and then leaves, they may be assigned to another advisor or even worse, added to the file cabinet of other ‘orphaned’ clients with no advisor at all serving them. A financial professional/client relationship should be a long one built on trust and that’s hard to do when your account becomes assigned to someone that the client knows nothing about.”

These are some of the most critical questions investors should be posing to any new potential advisor – but we are always on the lookout for new insights. So what additional ideas do you have to share? Email us your thoughts at This email address is being protected from spambots. You need JavaScript enabled to view it..

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