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A Few Simple Rules to follow when selecting a financial professional

Updated on July 28, 2014

Interview prospective advisors

When you meet with a prospective advisor, you should be interviewing them, as if you we’re an employer hiring an employee. You’re hiring someone to provide you their expert advice on areas having to do with your financial health and well-being. You need to think of your financial self as a business and you are hiring a contractor to be you Chief Investment Officer.

How do they get paid? There is nothing wrong with knowing. Do they get paid by you or by another company if they position you into one of their financial solutions? Do you pay a fee to your advisor and how much and how often? Or is it a combination of the two. This should not be the be all and end all on you decision making, your advisor is working for you and his or her time is valuable. They need to be compensated for their efforts on your behalf. However, your potential advisor’s forthrightness should be a key indicator if he or she is the right person for you to work with. That is to say, do they give you a straight answer.

Selecting the professionals that you will work with to help you achieve your financial goals is an important step. Make sure you do your homework and are comfortable with the people you chose to work with.
Selecting the professionals that you will work with to help you achieve your financial goals is an important step. Make sure you do your homework and are comfortable with the people you chose to work with.

Independent vs Big Company

During the course of my career I’ve worked for large wire houses and large insurance companies as well a boutique firms before forming my own. You have equal opportunity to find someone good or not so good for you at either.

As an independent financial consultant, and head of my own company, I am obviously biased. However, I feel the smaller boutique firms are more invested in your success. It’s simple your business is their business and you’re not the small fish in a huge ocean like you are with XYZ Investment Co. or ABC Insurance Company.

Salesperson vs Consultant

Your financial advisor is a salesperson, just understand that. Regardless of what his or her title is, their job is to get you to buy what they’re selling. That’s what they get paid for. And there is nothing wrong with that, however, you’re not buying a used car here. That being said, beware of someone who has decided what to “sell” you before you’ve even met. An advisor who operates consultatively will want to meet with you and gain a full understanding of your individual goals and financial situation before formulating an appropriate financial solution.

A consultant will make you feel like he or she is on the same side of the desk as you. That is to say, it’s very much in their interest that you are successful with the financial solution that they’ve recommended. A consultant will be equally invested in your success as that is the true measure of his or her success with you.

Red Flags

Know the Red flags when you see them and conduct yourself accordingly.
Know the Red flags when you see them and conduct yourself accordingly.

Go with your gut

If you have a meeting and you’re feeling uneasy about the motivations of the prospective advisor, don’t work with them. Trust me, you’ll be saving them and more importantly yourself from a lot of heartache in the future. You should have the feeling that your advisor is being honest and earnest with you. He or she is human, so if things don’t work out as planned for any reason, you need to at least feel like they were working for your best interest when they made the recommendation.

Red Flags

Someone who is more interested in themselves than you. That is to say they’re taking phone calls during your meetings. What’s problematic about this? One it’s just plain unprofessional. Two, they’re discussing someone else’s personal finances in front of you, so you can expect to be put in the same position. Let’s face it; if you’re speaking with your financial professional you don’t want just any random person to be privy to the conversation without your knowledge. Also, beware of the speakerphone users for the very same reasons.

I always tell clients to leave a message when they call me because I will not answer if I’m in a meeting with another client.

Now I’m not saying that your advisor should never answer his or her phone, family emergencies can always occur. I myself will always excuse myself if I get a call from my kid’s school. Family is important, I would wonder about anyone who didn’t feel the same way.

Someone who is willing to bad mouth your existing relationships in hopes to get your business is someone to think twice about. It’s unprofessional and just plain in poor taste. You can have more than one professional working to secure your financial well-being. It’s not uncommon to have someone managing your stock portfolio an insurance based advisor taking care of your family’s life, health, and long term care needs. Every player on your team needs to play their part. That’s all.

High Pressure Tactics

You never want to feel pushed or pressured into making a decision. Is your prospective financial profession is pushing you to make a decision. If the decision is that hard to make, well then it’s probably not the right one for you. It doesn’t matter if your advisor is right or wrong, how does it benefit you to earn a healthy return on an investment if you cease to be able to sleep because of it. It doesn’t. Don’t sacrifice peace of mind for a potential return on investment.

In Closing

Go with your gut when choosing a financial professional to work with. Your instinct will be your best guide as to how to proceed when choosing an advisor or other financial professionals to work with. You should be able to develop a rapport and establish trust. Trust being the key issue as you are trusting this individual or individuals with advising you on your financial well being.


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