I recently saw some social media thread comments where people voiced complaints about financial advisors. “Bunch of high-priced crooks” generally summed it up. I swiped passed without much thought.
Later that evening, my wife recounted a conversation she had while serving jury duty, and it made me pause. She went on to say that while on lunch break, she and two others had brown-bagged for the day and had the usual conversation in the breakroom – “What do you do?” “Are you married?” “What does your husband do?” That last one turned out to be the bingo question. My wife said that I was a wealth manager and had my own company. Juror number seven asked, “how do you know if an advisor is a good guy, and how do you decide if they’re trustworthy?” He went on to say that his father-in-law had not one, but two bad experiences with brokers/advisors, and it had cost him a great deal of money. I was sad to hear that what I discounted earlier in my social media stream may be more legitimate than I had thought. Clearly, naive thinking on my part.
I’ll confess, my wife thinks I’m a pretty good guy. (When she has doubts, I remind her she said yes!) The way she answered genuinely made me proud. She said that she had listened to me talk about my work and my work experiences so much over the years that she felt confident that her response was really the right one and the one that mattered most.
“He always asks a lot of questions. He doesn’t ever assume he knows you or what problems you need help solving. It’s really important that you like each other and that it’s hard to have a good relationship if you don’t. That’s where the trust part comes in. And, it’s important that you understand everything that’s going, and he won’t move on until you do. I wanted to say, ‘he’s like his dad, who was the most generous person ever, and he genuinely likes helping people,’ but I couldn’t explain that part.”
I understand the position I’m in and the importance my role plays in people’s lives. It’s serious business, and I treat it as such. I’ve learned many things in 22 years of wealth advice, but the top two things on my list that make people crazy are their kids and their money! Rightly so. Family is everything and family takes funding. Hence, the importance of hiring the right person. But, how do you know if an advisor is ethical and has your best interest at heart? If you can’t meet with my wife for a little due diligence, these tips may help.
- BrokerCheck, is a repository of records for registered individuals that contains history of their troubles or lack thereof.
- Google the potential advisor – you’d be surprised.
- Continue to ask questions throughout the relationship
- Never do anything you don’t understand. Ever.
Ask questions. Lots.
- What licenses do you hold?
- What custodians do you work with?
- How do you charge clients?
- What are your fees?
- What is your investment philosophy?
- Do you manage assets in-house, or is it outsourced?
- What are your disclosed conflicts of interest?
- What is the liquidity of recommended investments?
- Can you provide cash flow modeling?
- Do you provide written plans if requested?
- How will we communicate?
- How often will we meet face to face?
- Are you an ensemble team or a solo practitioner?
- How many clients do you have?
I’m not meant to be everyone’s advisor, and not everyone is meant to be my client. That is a fact. There are good reasons for that, and they’re not nefarious ones. Any good advisor should tell you the same. Being ethical and putting the client’s needs first are the minimum requirements you should expect and accept.
There were lots of good, qualified candidates out there, but I did my due diligence and married the right girl. Do your due diligence, and you’ll have a better experience too.