The relationship between a client and an advisor is just that, a relationship. Like any other personal connection this relationship requires compromise, mutual understanding and most important of all- trust. A failed financial partnership can be as emotional and costly as any other failed relationship we may experience. With so many new products offering different ways for investors to make and potentially lose money, it may be difficult to find a financial advisor who makes you feel comfortable both personally and financially. Whether you are looking for a new advisor or beginning to question an existing affiliation, here are three surefire ways to know you have an advisor you can trust.
- They are more concerned with your goals than their business.
When you meet with a new advisor you shouldn’t feel like you are being pitched or sold to. The ideal professional will be more focused on your goals than growing his or her business. A major red flag that is often overlooked is an advisor bringing binders or formal presentation materials to a meeting, especially while you are building rapport. You want to be able to have a genuine conversation where you are being heard. Be sure your advisor is actually listening when you are discussing your wants and needs for the future.
Another red flag is when advisors focus more resources on growing their business than servicing their clients. What do you discuss during your review meetings? Are conversations about your short and long-term goals or is it product focused? If they are not spending time on relationship management it may be time to start looking elsewhere.
- Your advisor hired you.
Any successful advisor will tell you that they hire their best clients, not the other way around. For the relationship to be mutually beneficial he or she must be genuinely invested in you as a person. How do you know if your financial counterpart is being genuine? Put them to the grocery store test.
The grocery store test is a hypothetical situation where you ask yourself: If I ran into my financial advisor at the grocery store would they acknowledge me? Would he or she stop and have a conversation with me? And if so, would they ask how my kid’s baseball game went or would it be uncomfortable small talk about my finances and new product offerings? Advising the right way goes way beyond numbers, which is why many people in the industry remain skeptical regarding the success of robo-advisors.
- They have a clear plan.
In addition to personal engagement, it’s important to find someone who has experience working with clients that share your objectives. Advisors are only human and they can’t be all things to all people. If you have unique needs such as a recent divorce or a specific career, you may want to find a professional who runs a specialty practice. The best advisors have a clear focus.
Is your advisor offering you a means to an end or are they providing you with a clear path to get you where you need to go? The economy is ever changing so it is important to work with a professional who has a contingency plan in place. Don’t be afraid to ask what the plan is when interest rates go up or if you decide to retire five years sooner. Nobody has a crystal ball but you should be looking for that evolution of continuing to meet your needs as things change. You should be able to leave every meeting and answer the simple question: “Why are we doing this?”
Choosing a financial advisor is one of the most important decisions you will make financially and even personally. Be sure to do your homework, ask for references, and trust your gut instincts. Perform your due diligence and remember, good sales people talk about returns but good advisors talk about goals.
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