Published by Erik Christman, CFP®, CPA | May 07, 2018
There’s a lot of noise out there. The internet has transformed the world, releasing the power of information in amazing ways. But it also has become a venue for the dissemination of much nonsense. Every talking head or columnist seems to profess a different strategy, and in no industry is that truer than financial services.
A healthy sense of skepticism has always been wise, and in today’s informational avalanche, it is essential. Perhaps there was a time, at the apex of journalistic integrity, when individual investors could trust much of what they read in print. But today, you need to follow a set of clear principles so the media noise won’t get in the way of your progress.
People sometimes ask us whether we have some trick to gauging the market. We have no wand or crystal ball. We do our utmost to help clients find the right strategy — and rather than a trick, that requires a good measure of sense. We do not know, nor does anyone, exactly what the future holds at any particular time. We approach investing by building portfolios in anticipation of market volatility, not in reaction to it.
Many people find it tough to resist the temptation to make a rash move in a bear market as the media noise becomes deafening. If you are concerned about whether you have the discipline to stick to a plan, professional guidance can help you. People hire specialists all the time to handle tasks that require specialized knowledge or that (for whatever reason) they don’t want to do themselves. Wise leaders delegate. In particular, when it comes to your personal finances, a credentialed, fee-based financial professional can give you knowledgeable and experienced advice on how to attain a fruitful retirement.
Here are some things you should look for when selecting (or deciding to change) a financial advisor:
- The advisor engages both members of a couple, rather than directing conversation or questions to only one person.
- The advisor works with you to develop a comprehensive financial plan, addressing things like mortgages, insurance, college planning, estate planning, etc., rather than focusing exclusively on investments.
- The advisor is fully transparent about how he/she is compensated.
- The advisor is forthcoming about his/her background, credentials, or the other types of clients he/she works with.
- You feel comfortable that the advisor is someone who is capable of, or truly interested in helping you plan for your financial future, rather than simply selling you products.
- The advisor is in regular contact with you, rather than calling only to recommend a particular investment product.
- The advisor would be supportive if you choose to pay off your mortgage, rather than encouraging you to keep the money invested so he/she doesn’t lose fees on the managed assets.
At the best financial services firms, the most valuable service is not what prospective clients might think. It’s not how we model whether clients are on track for retirement, nor is it about how we build optimal portfolios with the right managers. Our most valuable service is that we are a steadying force through good times and bad. We keep people on track with the plan that they agreed was the one that made sense to them, and we provide continued guidance and coaching and help clients develop the discipline to fend off the temptations.
The bottom line is always going to be trust. It should be a given that your advisor will take good care of your money. What will keep you coming back is the reassurance that the advisor cares about you. The analytical approach only goes so far. You should expect to have a long-term relationship with your financial advisor. You want someone who has your back — not just your account.