How To Choose A Financial Advisor
Choosing a financial advisor may be one of your most important financial decisions. Here’s what you should know before you hire or change advisors

I want to talk about How To Choose A Financial Advisor.

According to some recent research from Cerulean Associates, there are approximately 285,000 financial advisors in the Untied States. So, where do you begin and how do you choose somebody that’s going to be right for you and your situation?

One of the first places that I generally like to start is to start by talking with friends and family. Ask them who they use for a financial advisor, and more importantly, ask them if they like their financial advisor. Beyond that, after you’ve gotten a couple names, you’re going to want to spend some time interviewing or talking with some of these advisors.

First and foremost, you want to find somebody that you like. Obviously, this is somebody that you’re going to work with for a long period of time, somebody that’s going to help you move forward with some of your financial goals. And it’s also going to be somebody that you need to feel comfortable with, because often times, you may be sharing what could be some somewhat intimate aspects of your financial life with them, and you need to feel comfortable that they’re going to be accepting of that and help you move forward towards your goals.

As you start looking at these advisors, here’s a couple of questions that I think you should have in mind, and some things to think about.

1.  You want to look at and understand how do they communicate with their clients.  What is their process for meetings, and how often will you hear from that advisor. Something that we use within our practice, is we like to refer to something called agenda-driven meetings. And what that means, essentially, is every single meeting that we have with a client is going to get followed up with an email, and in that email, we’re going to have a summary of what we discussed at that particular meeting. If we’re doing some financial planning, we’re going to talk about any discoveries, any things that we maybe updated within that financial plan, any new goals that you have, and provide a really nice summary of that. We’re also going to have a detail of any homework that we’re going to be working on. So we might have some action items that we need to follow up on. We’re going to list those out. We’re also going to have a timeline as to when you could expect the completion of those action items. There maybe be some homework that you need to do, so we’re going to list that out. Maybe you need to grab a pension estimate from work, or maybe you need to download something from the social security website, we’re going to list that out. And so you might have some followup items that you need to get back with us. We’re also going to have the next meeting that we’re going to have, too. We’re going to have a timeline for when that meeting is going to occur, and we’re also going to have some details as to what the agenda of that meeting is going to be. So you’re never going to wonder, when am I meeting with Bill again, and when is our next meeting? That’s going to be right there in every single followup that you get.

2.  The next item that I like to see with a financial advisor is technology. Like most industries, technology has really influenced the financial industry, and we’ve got some really fantastic tools that we’re using on a regular basis and implementing them with our clients. Some of these tools relate to our financial planning. We have some very sophisticated financial planning software. We also use some very good risk management software as well, that kinda helps us to identify the level of risk that somebody is comfortable with. So, you want to find an advisor, in my opinion, that’s utilizing some of these new technologies out there.

3.  You also want to understand what their process is for investing, and this may be one of the most important aspects, as well. But understand what your portfolio is going to do for you and understand what every aspect of your portfolio, what its purpose is and what that’s going to do for you long-term, and how that incorporates in with your financial goals. Obviously, if you’ve been watching some of our videos here, you know we’re very big on financial education. So we like to spend a lot of time with our clients educating them about their portfolio so that they understand why we’re doing certain things within our portfolio, how we’re going to react to certain market events, and so forth.

4.  The last thing I want to talk about is financial planning. Obviously, not every financial advisor does financial planning, but we do here within our practice. In fact, I was fortunate enough when I started in the business back in 1993, I was actually hired to be the financial planning coordinator for our office that I worked at within Merrill Lynch. And I got to grow up in the business doing financial planning and using that as a big part of what we do. So, the type of financial planning that we do is something called cash-flow-based financial planning. And although many financial planners do financial planning, fewer of those do cash-flow-based financial planning. The way you can tell the difference, essentially, is cash-flow-based financial planning is going to give you much more detail and a better breakdown to understand exactly what’s going on within your financial situation. So rather than just doing a retirement report that says you’re going to be fine in retirement, we’re going to get in to some of the detail to understand where that money is coming from, how that money is going to be taxed, where any shortfalls may occur down the road within your cash flow situation. Cash-flow-based financial planning, especially as you get closer to retirement, I think is very, very important.

One of the things that we’re offering if you’re interesting in taking a look at what we do here, we have a free, no-obligation introductory call. Generally this is a 15 to 20 minute call that we arrange, where we can spend a little bit of time trying to understand a little bit about what it is that you’re trying to accomplish within your financial goals and we can tell you a little bit more about some of the things that we might be able to do to move you forward or help you feel more confident about some of those financial goals. Just call us at 248-731-7829,  Julie, my assistant, will schedule a convenient time for you, where we can, spend about 15 or 20 minutes, learn a little bit about what you’re trying to do, and if it makes sense, we can talk about some next steps to move forward.