5 questions to ask yourself before hiring a new financial advisor

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There are several considerations when choosing a financial advisory firm, especially if you are in the prime of your professional life and have plenty of time before retirement.

For one thing, think about whether the advisors are trustees. More and more investors today want to work with a professional who advises (as opposed to selling products) and has a legal obligation to consider a client’s best interests.

Do the consultants also have a good disciplinary record? A violation does not mean that a consultant is a crook. Mistakes happen. But if you haven’t kept your own house in order in the past, do you really want them to manage your family’s money? Entering their name in FINRA’s online broker check tool is an easy way to find out.

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Another factor is personal chemistry. Remember, your professional relationship with a counselor is similar to that of a doctor—it can last for decades. You don’t have to be best friends, but it would be better if you liked them.

These are all important issues. A question that doesn’t come up that often, however: how well equipped are the firm and its advisors to grow and evolve? Here are five questions to ask your current or potential consultant to determine if they are already working or able to keep up with your ever-changing needs.

  1. How long has the leadership of your company been in existence and how many have been promoted internally? It would be silly and impractical for a company—financial services or otherwise—to have a policy against hiring outside talent. In fact, experienced leaders who can help organizations become more efficient and provide better services are valuable, no matter where they come from. However, if too many executives are new to the company or haven’t been trained in-house, it could be a sign that these are short-term guns whose primary job is to spur growth at all costs. This approach can result in lower margins, but investment is unlikely to flow back into the company that improves your experience.
  2. How long has the staff been there? A startup can be a great place to work. Everyone is new and has a purpose that often fills the workplace with a positive, almost virtuous energy. The story is sometimes different when established companies have few permanent employees and all are new. It could indicate that the culture is bad. It creates a whole different energy throughout the office—one that might eventually trickle down to clients like you.
  3. When was the last time you updated your technology and how integrated is it?? Imagine you are sitting with your advisor and looking at a screen showing your investments. You have a question about one of your assets, but it doesn’t exist. To find it, they need to log into another system. While this may not seem like a big deal, it’s a big red flag when an advisor has to switch between two platforms to see all of a client’s inventory. That means they either have outdated or inferior technology – which in turn suggests they care more about improving their own margins than investing in current, integrated systems.
  4. What safeguards do they have in place to protect customer data and thwart cyberattacks? Most cyber and data incidents result from human error (i.e. someone internally clicks on a link they shouldn’t). With that in mind, ask them how often they attend cybersecurity awareness training. Also, ask if they monitor potential vulnerabilities in their systems and devices. Remember, it’s not just confidential information that gets compromised here – bad as that is. It’s also about being able to trade within your portfolio at any time. If a cyber attack shuts down your business for an extended period of time, you may not be able to do so.
  5. How many of your advisors are near or under 40? The financial services industry is facing a demographic crisis, with the average advisor being around 55 years old. To make matters worse, many of these consultants have no succession plan. There’s nothing wrong with working with a senior consultant. At the same time, if they retired without someone internally taking their place, it would create a long line of problems for them. If a consultant isn’t planning for their future, would you want them to plan your future?
How to choose a financial advisor

Your needs will change as you advance and different things happen in your life, whether it’s getting married, having a baby, or changing careers. That’s why you need a consultant who will evolve with you.

Good firms and advisors can keep up with the latest trends in wealth management and financial planning. However, the best stay ahead of them.

— By Donald C. Cutler, Senior President of Haven Tower Group.

https://www.cnbc.com/2023/03/16/5-questions-to-ask-before-hiring-a-new-financial-advisor.html 5 questions to ask yourself before hiring a new financial advisor


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