How do I hire an advisor?

Pam Krueger July 22, 2015

Why do people retire unsure if they will have enough money to see them through their golden years? A lack of trust of professional investment advisors is the number one reason, especially after the banking collapse, according to an Edelman survey.

Bad vibes from financial advisors left the Moores on their own and financially unprepared for a family illness. When Janice was diagnosed with a serious long-term disease, the professional couple from Atlanta recognized they would need to adjust to living with one less income. Why were they not prepared? The Moores didn’t see themselves as experienced investors, but at the same time they gave up on the idea of seeking professional advice years ago “fearing being taken advantage of after prior experiences that were not fruitful, but were very costly,” says Janice.

It’s become a cliché – too many baby boomers and now Gen Xer’s don’t have enough savings to retire, and all have stories about the challenges of do-it-yourself investing. Meanwhile, every week headlines call out bad broker behavior and further erode any sense of trust for Wall Street.

But let me ask this: what criteria have you used for finding and vetting your investment advisor? The reality is, people spend more time doing homework to hire a personal fitness coach than checking out a professional investment advisor’s background.

Making a Better Investment Advisor Match

Finding your way onto WealthRamp is your first step to accessing a much more thorough approach to your search to find the right financial advisor. We rely on the web to lead us to everything from the right apartment and the best orthodontist, to the ideal romantic partner. Young or old, we turn to the web because technology has become very good at making good matches.

Matching an investor to a qualified financial advisor involves a combination of key ingredients, including chemistry, expertise and clarity of intentions. The search starts with some basic investor education. Knowledge is power.

It’s all About the Interview

In the traditional model, the investment advisor takes control of the meeting. Clients follow along and nod as the advisor drives the questions and answers with plenty of references to seemingly sophisticated, complex investing strategies. The client typically walks away feeling the advisor has demonstrated superior knowledge and understanding of the markets, and that recommendations from this advisor will be appropriate.

Millennials are breaking this old-school model. Thanks to technology, younger consumers tend to arm themselves with questions so they can control the dialogue. They have already done their homework and are more confident about choosing the financial services they want. Millennials are also more apt to ask questions about what they will pay for those services and then use one of the many ways to comparison shop online. Still, even now it can be very confusing to figure out how one financial advisor differs from another in a sea of sameness and which credentials matter most.

recommend taking a middle-ground approach to working with a financial advisor. On a scale of 1-5, you fit somewhere between the do-it-all-by-yourself approach and the delegate-all-decisions mode. The WealthRamp Match Questions I ask help you focus on the most important considerations such as how often you expect to communicate with your advisor and what kind of interaction you really want. These are critical questions to ask yourself before you talk to the advisor because they are unique to your situation.

Get It In Writing

Full transparency is a non-negotiable point in the new wealth advisory world. First, ask the advisor to confirm his fiduciary relationship. Soon, all advisors may be required to operate under a fiduciary duty to act in your best interest.

Performance Record

Ask the financial advisor for her investment performance record on behalf of clients. You want to see her performance in bull and bear markets.

Unbiased Due Diligence

How did you find your financial advisor? Was he a friend or a referral from a friend? Many victims of investment fraud considered their advisor a long-time friend. These so-called friends communicated primarily through monthly statements itemizing false returns and/or unregistered securities.

Investment ponzi schemes are often developed through such networks of friends and family members. Always use objective third party research and advice when choosing a financial advisor.

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