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Questions for your advisor Part 1: Finding someone you can work with

By AdvocateDaily.com Staff

Investors shouldn’t be afraid to interview advisors before settling on someone they can work with, says Dawn Marchand, vice-president of marketing and direct distribution for CBIA/Lawyers Financial.

Marchand tells AdvocateDaily.com that the value of good financial advice can be significant, with one study showing that advised investors accumulated almost four times as many assets compared to non-advised investors over a 15-year period — after adjusting for socio-economic and attitudinal differences.

She says referrals from family, friends, colleagues and other trusted people are a good place to start the search for sound financial advice.

“But you can’t stop there," says Marchand. "Just because someone uses one advisor and loves her, doesn’t mean she’s right for you. This is a very important relationship to get right and you need to take it seriously because you’re going to be giving them your money and asking them to look after your finances.

“Set up a quick interview, ask them some questions, and see if it’s a good fit,” she adds.

Even a quick meeting can give investors a sense of some of the more intangible qualities that are critical to an ongoing relationship with an advisor, Marchand says

“There has to be a personality fit and a certain level of comfort,” she says. “When you’re talking about finances, this person will have to tell you when you’re overextended in one area or another and explain your choices. They’re not there to boss you around, but it’s not always easy to hear these things, which means you need someone you feel very comfortable with.”

To aid investors with their search, Marchand shares her three key questions for finding the right advisor:

1. Do you have other clients like me?

“Here, we’re talking about things like your stage of life, the value of your assets and maybe even your profession,” Marchand says.

“If you’re a lawyer, it’s going to be helpful to have an advisor who works with other lawyers and is already familiar with the financial needs, benefits and challenges of those in the profession, because they can better understand and anticipate your needs.”

2. What’s your approach to financial planning?

“Every advisor has a different approach and it’s important to know whether you are comfortable with it,” Marchand says. “You’ll have long-term and short-term planners, or advisors who feel that budgeting is a priority. Others like to start with an end goal in mind or focus on today’s needs. Some will take a holistic approach that takes into account insurance and investments in the same plan.”

If an advisor turns the question back on the investor, she says it’s best to avoid the temptation to answer.

“If you tell them how you feel, then the advisor will naturally mirror your answer. Instead, insist that you want to hear their thoughts.”

3. How do you work with clients?

“Personally, I prefer to do everything by phone and email, and maybe meet once a year, in person. Everyone has their own process based on their individual schedules and preferences,” says Marchand, adding that the initial meeting is the best time to set expectations.

“Another important thing to find out is how they are paid — whether by fee or commission. Again, individual preferences come into play, so it’s about what you’re comfortable with.”

Stay tuned for part two of this mini-series, where Marchand will explain what questions you need to ask your advisor once you've picked one.

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