The potential value of a relationship starts with the person who will be guiding your financial decisions. You’re looking for someone with deep knowledge and experience to back up their advice, and you want to gauge whether that advisor is a good fit for your family’s needs. Above all, you want someone you trust.
You learn a lot about an advisor once you start working with them—as you may have discovered with your current advisor. Trying to get a sense of what it will be like to work with an advisor before you hand over the keys to your finances can be more challenging, but here are three qualities to look for during your search:
1. An advisor who always acts as a fiduciary.
It’s critical to know that your advisor will provide objective advice that’s not tied to any financial incentives or other benefits they might gain (often at your expense). A fiduciary is legally required to act solely in their clients’ best interests. If an advisor doesn’t make their fiduciary standard immediately clear, ask them if they’d be willing to put their commitment in writing.
2. An advisor who offers comprehensive wealth management services.
Wealth management entails a lot more than just handling an investment portfolio. You want an advisor who takes a hands-on role in your overall financial health and security. Look for an advisor whose regular services include:
- Financial planning
- Tax planning
- Estate planning assistance
- Charitable giving assistance
It’s worth noting that many advisors say they offer these services but feel more comfortably managing your portfolio and may not regularly volunteer their insights in other areas. The best advisors don’t wait for you to ask questions. They’re proactive about managing your complete financial picture—alerting you to tax reforms or policy changes that might affect you or calling out financial matters that might not be top of mind in your day-to-day life.
How to Ask a Prospective Advisor About Their ServicesIf an advisor doesn’t discuss a full range of wealth management services in your initial conversation, try asking these questions to get a sense of their expertise and approach:
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While an advisor won’t offer personalized advice in a first meeting, their answers can help demonstrate their familiarity with these issues and how proactive they’ll be about pursuing these strategies for you.
3. An advisor with experience helping clients like you.
Every financial plan should be unique, but advisors who typically work with families like yours have a grounding in the factors that affect your goals and needs. That experience can help them immediately understand your financial situation, along with the various risks, opportunities and challenges you might face.
Finding an experienced advisor can be especially important if you’re in one of these categories:
- High-net worth families
- Executives
- Business owners
- Early-career high earners
- People nearing retirement
Consider the difference between a primary care physician and a specialist. For general health issues, a primary care doctor is perfectly skilled at performing regular check-ups and treating common conditions. But in some cases—like if you’re a performance athlete or you need hip replacement surgery—you need a specialist who focuses on unique patients or complicated procedures, day in and day out, for years.
You also might need an advisor with a deeper level of knowledge if you’re interested in special areas of investing, such as:
- ESG Investing
- Private investments
- Diversifying from concentrated positions in a single stock in a tax-managed manner
Advisors who specialize in clients with your needs won’t need time getting up to speed on the issues that you face. They’re attuned to tax law and policy changes that could impact you. They’re aware of complications that often arise for people in your position. And to guide you through difficult decisions, they’re able to share examples from their career experience and identify with you. Ultimately, that expertise will not only help you gain clarity, but will also give you confidence in your advisor and the work you do together.
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Disclosure:
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
