Take Control When Meeting With a Financial Advisor

May 03, 2019

Although an advisor writing a column about how to meet with an advisor may seem a little self-serving, the goal is to help readers make the most of their initial meeting with a financial planner and to identify some of the qualities to look for when selecting an advisor.

First, it helps to lean some of the basics of personal finance.  You might check out a book or two from the library, or read some articles online at sites like Yahoo Finance or Morningstar.  Hopefully, reading this column and listening to Smart Money Management on the radio will help to broaden your financial knowledge.  Another idea is to take a friend or relative with you to your meeting.  You might choose someone who is more interested in personal finance than you are.  You want someone who is assertive, but not argumentative.  If you’re married, take your spouse, even if he or she doesn’t have much interest in financial planning and investments.  In either case, you will benefit from having another set of ears and someone to take some notes.  Unfortunately, there are unscrupulous people in the financial industry, and it is easier to take advantage of someone who is alone or doesn’t know what they are doing.

Next, do a little preparation for your meeting.  Have a list of your assets such as your 401(k) and IRAs, stocks, bonds, CDs, insurance and annuities, brokerage accounts, real estate, and anything else you think might be relevant.  You should also make a list of your liabilities like mortgages, home equity loans, credit card debt, and student loans.  It’s also a good idea to have an estimate of how much you earn and how much you save.  In addition to those items, you also should have an idea of what you are trying to accomplish.  If you want to plan for retirement, have an idea of when you would like to retire and what you want your retirement to be.  If you are interested in planning for your children’s education, you’ll want to have their ages and an idea of where you might want to send them.  Prepare a list of questions.  Even if you know what you want to cover, you might forget as the conversation progresses.  If you don’t understand and answer ask for clarification or more detail.

In choosing an advisor, look for one who works with people like you – people with similar goals, asset levels and personality types.  One of the best ways to find one is to ask your friends and relatives who are like you for a recommendation.  When you interview the advisor, they should be able to tell you what they specialize in.

Another important step is to find out how the advisor is paid.  In general, fee-based advisors are required to act as fiduciaries, which means they must put the client’s interests first.  Commission-based salespeople are held to a lower standard, suitability.  This means that a recommendation they make must be suitable, but conflicts of interest may exist.  It is sometimes difficult to tell because everyone calls themselves “advisors” now, so pay attention to if they are paid by the hour or based on the assets they manage for you, of if they are paid by the transaction.  Insurance and annuities are almost always commission-based.  Take notes and ask for copies of the information that is presented to you.  This will help you to remember what was discussed and will help you as you reflect on the meeting.  You should always have time to think it over or get a second opinion.  If anyone pressures you to make a commitment over the phone or at a seminar or in a first meeting, it is a red flag. 

Finally, keep an open mind.  You are there because you are asking for advice.  If you don’t want or need the advice, you can do your financial planning and investing more cheaply on your own.  That being said, remember that you always have veto power.  It’s your money and it’s ok to say no.

For more information, you can listen to the podcast of Smart Money Management radio show on this topic, along with others, at www.alderferbergen.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

Securities and financial planning offered through LPL Financial, a registered investment advisor.  Member FINRA/SIPC