In last week’s blog we looked at what a Financial Advisor is and whether you should use a Financial Advisor.  Let’s assume that you are now at the place to begin looking for a Financial Advisor.  Below is a list of qualities and services that clients have told me for over 20 years are incredibly important to them.  You may agree with all of them or just a few but it will give you a starting point in the process partnering with a Financial Advisor. 

#1  The advisor should function legally in the role of a Fiduciary.

I believe this is the most important factor to start with.  It may surprise you that not all that provide investment or retirement planning advice are legally bound by the Fiduciary rule.  Simply put a Fiduciary can only make recommendations that are in the best interest of their clients.

#2  The advisor should be an independent advisor with access to a number of investment and insurance companies with various strategies.

Many advisors work as a “captive” advisor for a specific company.  They may have the legal standing of a Fiduciary, but they can only sell the investment products of the company they work for.  To me it’s only common sense that one specific investment or insurance company can’t provide strategies that are always in the best interest of every client.  An independent advisor doesn’t work for one specific investment or insurance company.  They work for their clients. They sign selling agreements or soliciting agreements with a wide range of investment and insurance companies and have access to a variety of strategies to assist their clients.

#3  The advisor should have a well defined repeatable process they utilize to assist their clients in achieving their needs, dreams and goals in retirement vs simply selling investment products.

An effective advisor will have developed a process to assist their clients in decerning what is in their best interest, that develops a plan to help achieve their goals, is based on what’s important to the client, and then goes and finds the investment/insurance companies and strategies that have the potential to fulfill the plan created.  Their process should go beyond designating a risk tolerance then selling the investments they like best.  One of the way’s I describe my process is, “plan first, invest second”.

#4  The advisor needs to overcome their personal investment biases and be willing to work with all forms of investment strategies based on what is in the clients best interest.

Stocks, Bonds, Mutual Funds, ETFs, Annuities, REITs, Commodities, Alternatives, and a host of other investment vehicles all have pros and cons.  In addition, there is active investing, passive investing, risk management, growth management, and more investing philosophies then you can imagine.  A Financial Advisor needs to work within their own convictions and beliefs but then needs to be careful that they don’t develop tunnel vision and only recommend what they personally like best.  Different clients have different needs, and an Advisor needs to be prepared to look at many different investments and strategies and commonly use more than one to assist their clients.

#5  The advisor needs to effectively convey their services and set proper expectations.

Before partnering together, it is essential that an advisor conveys openly and directly what their services are and what the client can expect from the advisor.  This includes things such as reviews, fees, processes, added-value services, and any other issue that is appropriate to plan for.  The goal for every Advisor/Client relationship is to avoid the “I didn’t know that” or “you didn’t tell me” conversation that lead to unfulfilled expectations, disappointment, and any many cases an end to the working relationship.

#6  The advisor should have a succession plan in place should something happen to the advisor.

It’s inevitable, your advisor may not be there forever.  Either due to death, illness, retirement, or some other life changing event, it’s possible that you could find yourself without an advisor at some point.  It’s important to know if the advisor you choose has a succession plan for their firm so that if something happens to the advisor there’s no disruption to your investment and retirement plan and the service needed and expected.

#7  The advisor should fully disclose all potential fees associated with his services or the investments that are recommended.

Most financial advisors work for what is called an “Asset under Management” fee or “AUM” fee.  There is a wide range of what advisor’s charge for their services and advice.  I would say on average it ranges between 1%-2%.  It is critically important to know what all fees are and what you are receiving for those fees.  It is also important to look at what returns “net” of fees have been.  Past performance certainly doesn’t indicate future results, but it gives you an idea of how the fee affected the outcome.  This is probably the most difficult point to decide on since the fee ranges greatly and the services provide vary greatly.  A conversation on the front end can go a long way in helping you make an informed decision.

#8  Make sure your advisor has the ability to interact with you in the way you prefer.

There has never been a time that it is easier to communicate then today.  We have email, voice mail, conference calls, texting, virtual meeting, and even old-fashioned face to face meetings.  It is important to make sure the advisor you choose utilizes your preferred method of communication.  During Covid many people decided virtual appointments were more desirable then in person.  And yet many advisors were hampered by lack of technology in their office to effectively communicate.  On the other side of the coin, as people began meeting again in person, some advisors had transitioned to virtual only going forward.  Make sure the advisor has the ability and the willingness to interact with you in the way that is most productive for you.

#9  Personality Matters – make sure you are comfortable on a personal level with your advisor

I’m not suggesting that the advisor and client need to become best friends. But I do suggest that it’s important to at least be comfortable with your Advisors personality.  Reviews are critically important to a successful investment and retirement plan.  You don’t want to dread visiting with your advisor.

#10  Approach choosing a Financial Advisor with the mindset, “Are we a good Fit to work together”?

The fact is, not every client and advisor are a good fit for one another.  If the advisor you are interviewing doesn’t bring up this subject, then simply ask them, “what kind of client are you looking for”?  This may have to do with amount of assets, age, goals, etc.… You never want to associate with an Advisor if you aren’t considered a valuable client.  At the same time explain to the advisor what you are looking for in an advisor so you can decide if they are a good fit.  In all successful relationships it needs to be a win-win for both parties.  So, taking the time to make an informed decision if you’re a good fit to partner together.  This is much more important in the process then most clients and advisors think.

Some of these tips may not appeal to you personally and you may have some personal ones to add.  But having criteria prepared of what you want in a financial advisor before meeting with them is a great step in successfully partnering with a Financial Advisor who can assist you in achieving your needs, goals, and dreams

I would love to spend 60-90 minutes introducing my Four Cornerstone Process Investment and Retirement Planning process and seeing if we may be a good fit to talk further.  I address all of the issues above and more in the first 10 minutes of the meeting.  To schedule this meeting give me a call at (865)288-7685 or go back to the home page of my website at www.stiversfinancial.com and click on the “schedule appointment” button and it will take you to my calendar where you can schedule an appointment at your convenience.

Best of luck as you look for an Advisor that’s a good fit!

Brian