By Matthew Weberling
Very few people will ever enter a relationship with a financial advisor. There are many reasons for this that are beyond the scope of this writing, and I wanted to focus on the people that WILL take action to partner with a professional to plan for their future. Preparing for an advisor relationship can seem overwhelming and an advisor’s job is to help people overcome those feelings of anxiety and uncertainty while demonstrating value to the client. It has been a hard year and people are looking to feel a more solid foundation. They want more certainty because it brings a feeling of being more in control. Wanting stability and security is a normal human perspective so you are not alone. Let us explore a few thoughts on how to prepare for a financial advisor relationship.
Why a Fiduciary?
A fiduciary is obligated legally, ethically and for compliance purposes, to always place the best interests of the client ahead of their own. This is an immensely powerful type of relationship. It means the advisor works directly for and on behalf of the client. Think about that. A financial product salesperson selling a third-party labeled product for a commission simply does not have the same standards as a Fiduciary. One is a mostly one-time “transaction” centered sale after which there may never be contact again. The other is an ongoing “person” centered relationship based on trust and genuine shared interest in the success of the client. Yes, there is a difference. Do not be afraid to ask if somebody is a Fiduciary. Most will be thrilled to tell you if they are. Use https://brokercheck.finra.org/ to see the licenses, disclosures and other information related to the person you are partnering with for financial advice. Look for a Series 65 or Series 66 license, and then confirm with the advisor that they are in fact acting as a fiduciary.
The Mindset Change:
You must WANT it! Engaging a financial advisor is a conscious effort that starts with a decision to act. Keep in mind that I did not say “THINK” about acting but moving beyond thinking to doing. If your mindset is not in a place to consciously plan and seek more security in your future and retirement, then it cannot be forced. This mindset piece is what eliminates many people from entering this relationship. The excuses are too numerous to list and “too busy” is an easy way to avoid the mindset change. Wanting financial security for yourself and your family is not greed and that is a critical component of this mindset shift. Changing the outright dangerous mindset of “I don’t have anything/enough, so why try at all”, is another crucial step. Having a small amount of money invested or saved today does not mean you cannot actively plan to change and improve in the future. Small, measured steps undertaken as part of an overall plan have a magnification effect over years. I have a key belief: “Investment is the Middle-Class bridge to wealth”. Period.
The Relationship:
Prepare to talk about more than money and investing. Money is simply the tool and means by which you live your life according to your wishes and goals. Getting to the heart of what drives you as a person is something that a good financial advisor will take the steps to do. Be prepared to discuss things that make you soar and things that make you unsure. Be prepared to talk about life and death and the big themes of your life. A good advisor can help spouses or life partners better their understanding of each other’s aspirations and what they see for themselves and for their family in retirement. A good advisor will not just know your children, they will watch you save for their college for 15+ years and then go to their graduation party to see the dream come true in person. Being introspective is healthy and may in fact lead to less stress. We could all use a little less stress, I think.
The Documents:
This is simpler than it sounds. Most of these things are easily accessible. The more information there is to inform the “Suitability” views of the advisor, the fuller the picture is to build the financial plan and most importantly, to give the best recommendations and advice for the client. These include: Tax returns, retirement plan and brokerage statements, IRAs, property and mortgage values, other expected retirement income, bank accounts, estate/trust documents, and ALL other assets and liabilities. A good advisor will be able to take many of the onboarding tasks off your plate so you can live your life.
These few thoughts by no means exhaust the conversation but rather aim to be a starting point for preparing for the next step. Many people who cross through the looking glass to engage in a relationship with a Fiduciary financial advisor will find a rewarding and fulfilling experience waiting on the other side. It can change their life for the better and it often is not long until the client begins to “feel” the value and the benefit of this special relationship. If it is the right person at the right time, it can have a lasting impact that can be both felt and measured. If you are at the action point, congratulations! You might just love what you find on the other side of that door.