Opinion: How to choose a financial professional?

Updated: Oct 15, 2020


LOTS of opinion articles on this topic. The angle of most of these articles is as though you're on a "Tinder for Financial Advisors" and all you're doing is 'swiping right' all the time to try to select "the perfect advisor for you". Most have their biases in their articles, particularly by credential-issuing organizations.


Here is the CFP Board's Ten Questions to Ask Your Financial Advisor.


Here is The American College Ten Considerations for Choosing a Financial Professional.


Most industry (and financial press) articles cite a few things: Experience, compensation, credentials, ethical conduct, services offered, conflicts of interest, etc.


Here is my first problem with these checklists: They automatically inspire doubt and fear into the person doing their research that "everyone else is out to get you and rip you off, unless YOU do your due diligence".


My second problem with these checklists: It assumes that every financial professional can be very similar to another! Now, if "we all did the same things", then what makes us each stand out? Having more credentials, years of experience, more industry accolades and memberships, more educational background... none of which really matters.


This would be my ideal question that a financial professional should be asked.


It's good.


Are you ready?


Here it is:


"What is your financial philosophy for your clients?"


That's it.


Now, to that question, you can expect a few responses, and the response indicates the level of specialist that you're working with.


The Generalist: "My job is to help YOU with YOUR plan, dreams, and goals using my knowledge, products, and services to help you accomplish that." Or "We just want your money here."


Not very specific, is it? Besides, what if YOUR own plans are actually not as good as what the advisor COULD be doing for you? Isn't that a lower-level of service?


The Specialist (this is how *I* would respond): "In everything I do, I believe that the American Public is being systematically robbed and lied to by four major forces: banks, financial institutions, Wall Street, and especially, the Internal Revenue Service (IRS). I believe that what they TELL us to do, and what they actually do for themselves behind the scenes is in direct conflict with one another. I want to show the American Homeowner and Taxpayer how wealth works as opposed to math, so that they can understand how these institutions are siphoning their wealth without their even realizing it, and we can make new decisions that recapture and put that money back to work for them immediately."


The specialist has a philosophy, a message, a cause, a belief that they are passionate about! The specialist can also back up everything that they do - why they believe what they believe, outlining the problems, and having a great solution (or multiple solutions) for solving the problems that they see.


The price of being a specialist... is that not everyone is a fit for the work they do. That means that it's up to the specialist to risk walking away from an incompatible relationship. The generalist cannot conceive of walking away from any potential business. But it's also easy to determine if what they do is in-line with what YOU want. If it's not in-line with what you want, no problem! Interview the next one on your list.


In being a specialist, none of the traditional interview questions seem to really matter, do they? Do you care about the specialist's credentials? Years of experience? Industry accolades? Modes of compensation? Not really. (Yes, you will care about ethical conduct and discipline.)


So, if you're interviewing financial professionals to choose one to work with, start with "What is your financial philosophy for your clients?" and see what they say.


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