Financial services: 11 tips for choosing a financial advisor

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Headshot of Bruce R. Wright

By Bruce R. Wright

Part of selecting good advisors is being able to take our ego and emotions out of the process. A lot of financial advisors who want to do business with us are going to attempt to get that business by telling us what we want to hear and, in effect, pandering to our egos and making us feel good about ourselves. Sometimes what we really need is for somebody to hit us between the eyes with a two-by-four called the truth and tell us that we might be acting as our own worst enemy.

Unfortunately, there’s no guarantee that the advisors we pick are going to do the best job for us. But there are ways we can effectively weed out those who won’t and give ourselves a better chance at picking those who will.

Here are some guidelines for choosing advisors:

▪ Congruent agendas: Recognize your advisors’ agendas by asking, “What’s in it for them?” Make sure their agendas are in alignment with yours. There is nothing wrong with advisors wanting to provide for themselves and their families, but make sure their self-interest doesn’t override the benefit to you.

▪ Don’t deal with dabblers: No one person can expertly handle all the complex strategies needed to manage your wealth. When something as important as your personal or family security or wealth is involved, get the best help available. Would you rather have a general practitioner or a neurosurgeon performing your brain surgery?

▪ Check referrals: Advisor candidates will only provide you with good referrals. Besides talking to satisfied clients, check to see if the advisor is recommended by other highly qualified professionals or organizations. How much should you bother? If your money is important to you, check!

▪ Selective disclosure: Are your advisors letting sleeping dogs lie? Are your advisors only telling you what they want you to know so that you fulfill their agendas but not your own? The best defense against this problem is to get second opinions and work with a proactive team of high-level advisors.

▪ Honesty: You want advisors with integrity. If they can’t answer a question, will they admit it and bring in specialists to help you? Many advisors won’t bring in specialists because they’re afraid they’ll lose you as a client if they seem less knowledgeable. Some are too greedy to let the revenue go to someone else, or their ego won’t allow them to interact with other advisors. Look for advisors who are honest about their ability and capable of working with other advisors; together they will look out for your best interest.

▪ If they could have, why didn’t they? Never hesitate to ask yourself and your advisors this question: If your advisors could have helped you achieve your goals sooner, why didn’t they? If your advisors knew about these options, why didn’t they present them to you before?

▪ Mathematical analysis: Seek advisors whose mathematical analysis makes sense. Ask questions centered around your personal goals and ask how a proposal, strategy or recommended action would mathematically affect your macro and micro needs. Make certain your advisors support their recommendations for or against a proposal with all of the facts and the math.

▪ Get a second opinion: Always get a second opinion on anything important, expensive, dangerous or painful. But beware of any advisor who uses the “Not Invented Here” stamp – who simply dismisses a proposal with, “Oh, that won’t work for you.” Ask, “why not?,” and keep asking until you are satisfied with the answers. Request an analysis demonstrating why the new proposal won’t work for you.

▪ Relationships: Choose advisors who produce results and solutions, not those who use their relationships with you as the primary reason why you should do business with them. Don’t let them tug on your heartstrings or push your fear buttons.

▪ Don’t be a guinea pig: Important decisions or actions should always be addressed by the very best specialists available. Make sure your advisors are experts. Don’t pay for a lot of research time. You don’t want to be a test case for your advisors with the IRS. As a group, guinea pigs are not known for their high quality of life.

▪ Think global: In many of life’s important or complicated matters, we may have to look far and wide to obtain the necessary expertise to serve our interests. The world is full of people who are “conveniently located,” but who lack the requisite skill and/or creativity to solve our problems. Convenience and success are often mutually exclusive concepts in the real world.

Only you can decide if you want the best. You decide the level of talent and cooperation on your team. One weak or egotistical player may cause you to lose more than you can ever recover. Experts who perform at the highest level are available, if you look for them. Look for a talented, dedicated, honest, client-centered, creative team of specialists who will empower you to achieve your goals

Bruce R. Wright is a writer, trainer and consultant with a focus on financial services, but does not sell or provide investment, money management, insurance, annuities or any related products. He is the author of “The Wright Exit Strategy: Wealth, How to Create It, Keep It, and Use It,” from which this is excerpted. He spoke in Santa Clarita at VIA’s June luncheon.

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