A total wealth strategy will always benefit from the support of an objective, skilled advisor whose decisions will not be based on emotion. Much like asking a doctor for medical advice, wealth management is most successful when performed by a disciplined professional who has their clients’ best interests at heart (and hopefully, a decent bedside manner). It’s not only important to work with a professional – it’s critical that the relationship be a good fit. To ensure quality care and a strong partnership, the following are some key considerations and questions to ask:
Is my advisor a fiduciary?
A fiduciary has a legal requirement to place his or her clients’ interests ahead of their own. Clients may take this for granted, however, this needs to be verified when evaluating a financial advisor.
What are your professional credentials?
The “right” answer will depend on a client’s needs, but as a general rule, it’s best to look for a combination of experience, formal education and additional financial designations. Both IIROC and the AMF in Quebec are great resources to understand the variety of professional designations in the financial world.
How often do you communicate with clients?
In addition to the industry standard minimum of one time per year, clients should know how often they can expect their advisor to be in touch in order to stay up to date with potential changes in their clients’ financial landscape. Equally important to know is how easily an advisor/advisor’s team can be reached to fulfill transaction requests, answer questions/concerns etc.
What are my costs and how are they charged?
It’s critical that clients understand exactly what they’re paying and why. Clients should have a clear understanding of all standard and potential service charges, including how these might be calculated (vs fixed fee). It’s also important to know how and on what basis an advisor is compensated as well as how compensation might be related to investment performance.
Are we compatible?
Important to evaluate is an advisor’s service offering ((i.e. one or more of wealth planning, retirement planning, insurance, estate planning, private banking, etc.) Equally, an advisor’s potential niche has great impact on his/her investment strategy. Knowing if an advisor’s client base or client service targets any one sector or client need is critical to evaluate compatibility of an advisor’s focus to one’s own situation.
What is your succession plan?
An advisor is going to retire at some point. It’s important to know if a transition plan exists, and what changes this process might entail.
Do you have a process?
Great advisors don’t give sales pitches – instead, they have a clear, concise explanation of their philosophy and investment process. And they work like therapists to identify a client’s unique needs, preferences, family structure, long-term goals, etc. In meetings after an initial one, a great advisor should provide a solid financial analysis that identifies the strengths and vulnerabilities of a current financial situation along with clear recommendations customized to satisfy unique client needs.
Will you always do what I want?
Behavioural coaching is an exceptional asset and is a key part of achieving long-term financial success. An advisor should be willing and able to speak up when clients make demands that might conflict with their goals. A good advisor is strong, stable and disciplined; his or her job is to keep the plane steady and level through all life stages.
(These questions were inspired by: The Laws of Wealth by Dr. Daniel Crosby.)