Published 5/6/2016 in The Maryland Daily Record
Hiring a financial adviser is a very important decision, one that has grown ever more complicated. Knowing the different aspects that go into selecting a financial planner, adviser, broker, consultant, agent, salesperson, shark, order taker … has the potential to be incredibly valuable yet also dangerous if an unwise choice is made. The confusion of who does what in such a vast industry has caused some to feel overwhelmed by the mega-mart variety of options. Banks, brokerage firms, insurance agencies, do-it-yourself firms, full-service companies – there are more options today than ever before. What will set you on a path toward a successful working relationship? How can you know that what you think you are getting is in fact going to have the intended outcome?
Here are some tips to help you determine the right choice for you:
1. Before meeting with potential candidates, think about your own financial goals, philosophies and needs. What are the things that are most pressing in your financial picture? Are you in need of specific financial advice to solve one issue, or would you benefit from a bigger-picture approach that encompasses the many moving parts of your life? How do these needs match up with the expertise and experience of the potential candidate? Is this person aligned with a firm and structure that can support their approach? Understanding what you want from the relationship will go a long way toward helping you determine the best partner for you.
2. A successful relationship is built on your needs and an adviser who invests time to get to know you, understand you and have a handle on what is going on in your life. Having open dialogue about your goals, dreams,
fears, worries, needs and wants will set the foundation of all planning. If the potential candidate is not asking about these types of details and instead focuses on the features and benefits to the products they offer, they are not looking at the level of detail that is required in order to provide comprehensive quality financial advice.
3. Be clear about the firm’s offerings, investment approach, reputation in the community and the way that they propose to invest your money. Do they have in-house money management, or do they partner with outside asset
managers? What is their general belief about how assets should be allocated? Do they only work with a specific group of products or does their platform allow for an open investment product offering? Knowing how your money will be invested is a key factor in this process. It is not expected that you are or are become an investment expert though when the adviser explains their approach you can expect to be able to follow along.
4. Understand the fees. Not all fees are created equal. There are different fee structures depending on the setup of the firm you hire. A percentage of assets, commission-based, hourly fees, project-based
fees are examples of how advisers are compensated. Knowing this upfront is key to managing expectations about the services being delivered and the cost for these services. It is important that you feel a sense of open dialogue and transparency when it comes to fees. This is a conversation that should feel comfortable and not one where you feel like you aren’t clear about how you will be charged. A really important rule of thumb in this department – if it seems too good to be true, it usually is. All professionals need to be fairly compensated for their work. Financial advice is no exception. Expect to pay a reasonable rate for the services provided.
5. Trust your instincts. The bottom line is that if it doesn’t feel right, something isn’t a match. There are many qualified people out there but not all of them will be a match for you. Even if it may be the perfect fit for your best friend, it’s OK that it just doesn’t work for you. There are many established, reputable providers in the marketplace, and there is no reason to settle for something that doesn’t feel just right for you. Provided that you do your homework, check out the credentials, talk to others who have worked with this person and firm, it is a safe bet to go with the adviser where you had the strongest sense of confidence and felt the most understood. This tends to lead to the greatest outcomes for you, your family and the adviser.
—Dorie Fain, founder and CEO of &Wealth