The Secrets to Selecting a Financial Adviser

Choosing a financial adviser is an important decision and not dissimilar to how someone chooses a veterinarian for his or her pet. A client rarely bases that decision on how much perceived knowledge the veterinarian has. Ultimately, it’s about trust.

Look at the Background

Similar to veterinarians, financial advisers are trained professionals who must obtain various licenses before offering their services. Some financial advisers get extra training to earn designations — which is analogous to a veterinarian becoming board certified.

Consider the

CERTIFIED FINANCIAL PLANNER

™ certification: Regardless of additional designations, it takes years of experience for complexities of the financial any adviser to master the industry. An adviser’s designations, or lack thereof, do not exclusively guarantee experience or excellence, just as a boarded veterinarian should not be deemed more skilled than a veterinarian in general practice. They’re just different. While continued education is important, it’s not the only criteria that should matter, and even highly credentialed experts do not always make excellent professionals.

No veterinary student graduates with enough experience to know it all, and the financial industry is no different. Once licensed, both professionals are ready to work with clients and generally offer the same services as their peers. Yet, in many ways, both industries are commoditized; veterinarians and financial advisers offer some combination of advice, services, products and recommendations. Clearly, in veterinary medicine, there are differences in specialties and services, such as small or large animal practices, or specializations in a specific area of medicine. In the financial sector, notable differences include whether an adviser works with insurances or investments, or offers financial planning for businesses, practices, retirement or estates.

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So, what differentiates a professional from other colleagues offering the same combination of services? If it’s not what is offered, then it must be more about how and ultimately why. Before choosing a financial adviser based on a menu of services, consider how and why he or she works with clients.

Ask the Right Questions

Two of the most common questions prospective clients ask a financial adviser relate to average rate of return and regularly beating the indexes. To someone without advanced investment training and proficiency, these seem like fair questions, but they are actually misguided because no two client portfolios are the same.

Goals and objectives, risk tolerances, spending habits, tax strategies and behaviors are unique to the individual. One veterinarian might be well into retirement and prefer a conservative portfolio, while another might desire more aggressive management. When the markets falter, however, the “aggressive” veterinarian likely calls in a panic and demands that assets be sold (at a lower price), even against the adviser’s advice. Both scenarios will result in an overall lower rate of return for the adviser, but without context it’s impractical to predict the outcome.

It’s also not possible for one better returns than another; adviser consistently to create even Warren Buffett knows are unique to this. Further, an adviser who beats the indexes might have a the individual. client who runs out of money in retirement anyway.

The bottom line is that asset management is just one aspect of holistic financial advising. An excellent analogy: examining a dog. While it’s important to look at the back left leg and ensure it is healthy, a veterinarian who doesn’t look in the mouth or misses that the dog is obese is not practicing good medicine.

Ask-Ask-Ask-Feel

The right questions to ask a financial adviser are not always intuitive, yet the answers are critical to the success of the adviser-client relationship. I like to refer to this as “ask-ask-ask-feel”:

• Ask the adviser to describe his or her own “why.”
• Notice what the adviser asks you in return.
• Ask about the adviser’s process.
• Later, check in with yourself to observe how you feel about the interaction. When you ask a financial adviser about his or her own “why” — “Why are you in this industry, and what do you like most about it?” — the answer should reveal a treasure trove of information.

Pay close attention to the delivery, as well as its authenticity and any passion behind it, because it can be telling. The answer might be geared toward interest in the financial industry, in building wealth and protecting clients, or a similar long-winded, technical response that threatens to put you to sleep. It’s not that these aren’t important aspects of the job; however, they don’t answer the question.

On the other hand, if the adviser reveals a personal story — perhaps something financially tragic that happened to someone he or she cares about and says authentically that he or she loves the opportunity to change clients’ lives for the better, that’s worthy of your attention.

You should also make note of what an adviser asks you. Does he or she ask about your goals, what you are trying to achieve or what you like or dislike about your financial situation? Does the adviser help you access your deeper thoughts, fears and perceptions about your finances? You’ll know if this is genuine if you’re paying attention. I had a veterinarian client who began our meeting by telling me that her dog just had his first chemotherapy treatment that day, and she wanted me to know why she seemed fragile. I was truly honored that she felt comfortable enough to share her sadness and be so open with me. It showed that she knew I cared more about her than about the specifics of what we were going to review.

Next, ask the adviser to discuss the process of becoming a client, and note whether the response includes an educational component. It is critical to find an adviser who will speak with you based on your financial literacy and take the time to explain complicated terminology. It won’t serve you if the adviser acts irritated that you don’t know the difference between a Roth IRA and a traditional IRA. Would you put a pet owner down for not understanding what Cushing’s disease is? Conversely, if you want to discuss advanced exit strategies, a great adviser should be delighted to delve into that complicated conversation.

Education should be the cornerstone of an adviser’s practice. Even though many of my veterinarian clients say they have no interest in financial topics, I like to challenge that. I ask if they’re interested in getting out of student debt sooner, never running out of money in retirement or minimizing the impact of taxes when they sell their practice. The answer is always yes, which tells me that they are interested and should take ownership of their financial situation and education. While I don’t expect my veterinarian clients to be ready to take the Series 7 Securities exam after a meeting, they should want to know why and how I make specific recommendations. Honor your own years of hard work by ensuring that your adviser is also honoring you, your family and your goals. Taking the time to find one who is engaged, proactive, transparent and passionate about designing a custom process, while educating you along the way, should be worth far more than the associated fees.

Finally, once you leave that initial meeting, reflect on how you feel. Simply put, this is about intuition. Do you feel you can trust the adviser? Does he or she genuinely seem to care? Do you get a sense of excitement about working with this person? If you already have an adviser, do these things ring true for you? Does your adviser check in with you, return calls promptly and provide clarity? If not, consider finding someone who is a better fit.

I met recently with a woman in her 60s who has saved only $100,000 for retirement. Her Social Security payout will amount to $2,200 per month, but she needs a minimum of $4,000 each month to live comfortably. Unfortunately, she does not own enough assets to cover the income gap, but I gave her some ideas — the best I could do. She later emailed to tell me that she appreciated how delicately I delivered the tough news and to thank me for gently sharing some thoughts on how she might improve her situation. Similarly, it’s vital that you find an adviser who will tell you what you need to hear — with a dose of kindness — not what you want to hear.

The Bottom Line

When it comes to when and how to choose your financial adviser, consider how your own veterinary clients chose you. Ask the right questions, trust your intuition, filter out fear and recognize that indecision is a decision. The sooner you seek advice, the better the chances that you’ll reach your financial goals.

Darby is a registered representative and investment advisor representative of CRI Securities, LLC (CRI) and Securian Financial Services, Inc. (Securian). North Star Consultants, Inc., Insurance Products and Services. CRI - Securities and Investments. Securian — Variable Products and Securities. North Star Resource Group (NSRG) offers securities and investments through CRI and Securian, Members FINRA/SIPC. CRI is affiliated with Securian and NSRG. NSRG is not affiliated with Securian. NSRG is independently owned and operated. 1100 Dexter Avenue N, Ste 100, Seattle, WA 98109. 1965707 / 12-2017