Whether you’re approaching mid-career, eyeing retirement, or determining how to preserve and grow wealth for future generations, financial goals all have one thing in common: They’re easier to achieve if you have the right help. A strong wealth management partner can bring your financial vision into focus, and while firm reputation and personal chemistry go a long way, here’s what to look for in a financial advisor who can take your goals to the next level.
- Are they a fiduciary? Fiduciaries are legally required to act in the best interest of clients. That might seem like a universal requirement, but on the contrary, some wealth management firms follow a wholly different standard of recommending investments that are generically “appropriate” based on things like age and proximity to retirement. Of course, appropriate doesn’t always equal what’s best for you and your family; that’s why working with a fiduciary offers valuable recourse in the planning lifecycle.
- Are they shooting straight with you? A trustworthy investment advisor will be proactive and upfront about services, fees, and other critical information. Some things are easy to spot: Are they charging you the industry standard of no more than 0.5% for digital advisory services and 2% or less for in-person consultation? Do they tend to buy and sell individual stocks frequently or lean toward actively managed mutual funds instead of passively run index funds — i.e. expense ratios that could result in more money out of your pocket? In addition to information published online, trust your gut instinct and never be afraid to ask for clarification on industry jargon or facts that sound glossed-over.
- Are they in it to “beat the stock market”? Before you start paying a money manager, understand their investing philosophy. Active investing — or stock-picking in an attempt to outperform the market — has a higher degree of difficulty than organizing a diverse, low-cost portfolio. Ask upfront what strategies your advisor is using to help you achieve your goals, and don’t work with an advisor who sees investing as a game he or she can “win.”
- Are they familiar with your unique circumstances? This seems like another no-brainer, but far too many advisors are quick to apply cookie-cutter strategies to clients with vastly different needs. An advisor who fails to take into account the differences between male and female income or life expectancy, for example, can’t possibly deliver thorough, personalized results for each client. Work with an advisor who knows exactly who you are, both in the granular and the grand schemes.
When in doubt about the answers to these and other important questions, simply ask. Taking the time to learn how and why your advisor is acting on your behalf will give you immeasurable peace of mind as you move forward in planning your life’s next chapter.