Choosing the Right Financial Advisor

Choosing the Right Financial Advisor

 “Oui, oui, ma petite madame.” – Which translates loosely into : « Don’t worry your pretty little head about it ».

This is something most women have experienced – feeling talked down to as if we did not have enough intelligence to understand a decent explanation. This happens when we take our cars to the garage, when the roof needs repair, when the electrician comes.

Unfortunately, we are often ill equipped to deal with the attitude because quite frequently we don’t know enough about the subject to respond and show what we are made of –  that we are strong, independent, intelligent women, able to deal with getting our car fixed. Instead, we walk away, feeling somehow diminished, undervalued and powerless.

Quite often, this also happens when we deal with our money. We are treated as if we have no idea what’s what,  and we go along with what we are told, whether it is the right thing for us or not.

How can we deal with this? How do we make sure that we stay in control when dealing with our money? How can we choose a person to work with that will respect us and our needs? Here are 8 hints to manage this situation:

1.       Remember that you are the boss.

If this is the beginning of your relationship, you are actually interviewing the advisor that is sitting across with you. If you do not get a good feeling from that person, you have the right and the power to walk away. Don’t worry about hurting their feeling. There are a lot of good advisors out there, so you can afford to make sure that you have good fit with the one you are meeting. If you don’t feel a sense of mutual understanding and respect, find another person to work with. This is a long term relationship -- and it is to your advantage that it be a good one.

If this is an existing relationship, then time for the annual evaluation, just like any job. Is your advisor meeting your expectations? Is she producing satisfying results, given the current environment and what you have given her as tools? Is he meeting your needs as you have expressed them? If not, it is your job to let them know that they are on probation and why.  If things don’t improve, it is your right to fire them and you owe it to yourself to do it.

2.       Have a good idea of what you want to accomplish with your money before you start the process and communicate it to the advisor.

Every one of us has different needs. As yourself what it is you expect. Are you most concerned about your retirement or more short term goals? Are you saving for a major purchase, like a home? How about your children’s education? Managing current debt and freeing up some money right now? Most people will have several concerns, but have an idea of your priorities before you go in.

Make sure the person on the other side of the desk understands and cares about your priorities. NO ONE knows your priorities better than you do. A good advisor will help you express them and categorize them appropriately, but no one can tell you what your goals are or should be.

3.       Be honest about your situation and what you want.

Sometimes we say what we think we should say, instead of telling the whole truth. That is the road to being unsatisfied, even if your advisor does the very best job possible with the information you give them. Like when you visit the doctor, if you don’t tell them everything that is pertinent, they might just miss the diagnosis or the best treatment. If what you want most is that new car, not saving for retirement, make sure to say that.

4.       Get an explanation about how the advisor is paid, and be realistic about what you are getting for your money.

You pay your hair dresser, your car mechanic, the guy who cuts your lawn. Financial advisors are professionals who deserve to be remunerated for their work. As a client who wants them to spend appropriate amounts of time on your plans and transactions, you want them to be satisfied with working with you. Most advisors are paid by commissions on the products or services they provide to you. Many may invest their time, resources and energy in building a relationship with you, and they may be very patient about having it come to fruition, but eventually they need to be paid. Find out how that will work. You will be amazed what kind of respect you will get from your advisor because you respected their needs as well.

5.       Watch out for the “razzle dazzle”

Managing money is painstaking, detail-oriented work, but it is not magic. Ask for explanations about what is being suggested. If you are not satisfied that the representative can make it make sense to you, this is not the right advisor for you.  Either the communication fit is not good, or the advisor is using terminology to razzle dazzle you into going along with his ideas.  A good advisor is one that will help you understand your options so you can make educated choices.

6.       Provide the advisor with a time and place where they can demonstrate their professionalism to you.

Some advisors will agree to meet you at a time and place that are convenient for you, such as your home in the evening, at your work during your lunch hour, or a local coffee shop in the afternoon. They may also offer their offices. All these choices work and you should select the one that works best for you. However, make sure that there are as few interruptions as possible and that both of you can concentrate on the issue at hand. When making the appointment, make sure to ask how much time to allocate so that the advisor can properly do their job for you.  It is very difficult for any representative to do a decent analysis of your needs if they only have a 15 minute window to get to know you!

7.       If it seems to be too good, it probably is.

Luck can do marvelous things and sometimes creates some really amazing results, but in general if it sounds too good to be true, you should ask for a better explanation (see hint 5).  If, after the second explanation, it still sounds too good, it is time to walk away. At best, the fit is not good between you and the advisor. At worst, the advisor is being dishonest.

8.       Listen to your instincts

After all is said and done, you need to feel comfortable with your representative, and sometimes your gut says “no”. Say “thanks for your time and walk away”. Sometimes your gut says “yes, this person I can trust and enjoy working with” and in that case, commit and move forward.

 *This newsletter/Presentation is intended as a general source of information only and is not intended to provide any personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. (insert name of Consultant) is solely responsible for its content. For more information on this topic or any other investment or financial matters, please contact your Investors Group Consultant