Jason Brown, Director of Advisor Success, Foster Group
In working with over a hundred prospective clients in the past five and a half years, here are the two most important questions to ask yourself when considering a Financial Advisor:
- Do I trust this person?
- Do I want to pay for their services?
Do I Trust Them?
I suppose the first one is unsurprising. Trust is the name of the game in this business. You need to be able to believe that the person acting as your individual CFO is trustworthy.
How can you know if an Advisor is trustworthy? Well, the truth is that there’s no way to know this with 100% accuracy. We’ve heard the stories of stunned clients who couldn’t believe the illegal activity their Advisor had been up to. Here are a few ways to measure trustworthiness. None of these should be considered in isolation.
- If you have friends who are clients, what do they say?
- What is their client retention rate? One thing to remember is that the retention rate in financial services, in general, is quite high. I would personally recommend you consider looking for something north of 96%.
- Transparency of pricing. Are their costs down on paper, easy to understand, and part of the reporting process?
- Are they a fiduciary?
- Do they have the CFP or equivalent designation? There are all kinds of designations Advisors can get. You need to know that MANY of them require little more than a 3-day course. The CFP designation requires 18-24 months of coursework, the completion of a comprehensive final exam and three years of experience. The coursework, prep classes and designation carry significant expense. And, the designation requires several hours of continuing education every year.
- Do they demonstrate a desire to know you – your history, your values, your hopes, and your goals?
- Intuition. Listen to your gut. Do you like and enjoy them? Do they “feel” trustworthy?
Do I Want to Pay for Their Services?
The second question is perhaps less obvious, but one that’s so important. Why? First, because Advisory services aren’t cheap. At the risk of alienating a few prospective clients, hiring an Advisor is an expensive proposition.
Here’s the other thing. I’ve spoken with several people who think they SHOULD pay an Advisor. Perhaps a friend, family member, or co-worker said you should work with one. It’s what people at a certain stage of life or with a particular net worth do. Maybe you just think it’s the responsible thing to do.
Working with an Advisor could very well be the wise and responsible thing to do, but, before you say yes to working with one, be sure it’s something you WANT to pay for. What I mean in using the word WANT is this: you see the value in working with an Advisor and are glad to pay for the relationship and the service. I’ve seen people hire us solely on the basis of SHOULD, only to realize within the first couple years they don’t actually WANT to pay for what we do. This is bad for everyone.
Our best clients are happy to pay us. I don’t know any other way to say it. They are thankful for a companion who worries about their money with them and brings ideas, expertise, and experience to every conversation.
There are other questions to ask yourself, but these two are the most important. In making a decision, give yourself the time you need to answer both with clarity. If you’re considering an Advisor, we’d love to talk to you.
| Jason Brown, Director of Advisor Success