Why finding the right Financial Advisor is harder than finding the right Doctor
“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong”. –Thomas Sowell
Reviewing multiple internet sources, here’s a way to find a good doctor, and how finding a good financial advisor for your needs is more difficult:
Step 1: Ask around. Word of mouth can be the best method, ask your family and friends for referrals because they can identify a highly skilled physician.
Finding a Financial Advisor is more difficult, because few wear their specialty on their title. Depending on what licensing group they came from, their recommendations could be completely different. Still, getting a few suggestions from friends and relatives helps with beginning the journey.
Step 2: Do a quality check. Research and compare different doctors online.
Having looked at dozens of financial advisors’ websites, it seems most do “holistic financial planning.” Many have one or a few credentials. Very, very few describe the type of client they are best suited for. This does not help you.
The best description of what any individual financial advisor does is described in the SEC-mandated ADV-2B document that most links to their website. Few showcase this legal document, though.
Step 3: Ask about logistics. Where is their office located? Can they be available via a call if you need them or are they only reachable by email?
Few financial advisors come up short here. But many simply give you a questionnaire to fill out if you want to inquire about them.
Step 4: Make a list of your needs. Consider any major health concerns, your age, gender, etc.
Often, the prospective client will not know what they need and will rely on the advisor to provide a solution. In too many cases the advisor will not interview thoroughly enough to give a good solution. Also, few will refer you to someone else if your needs and their skillset do not match. Remember, there is no formalized training in this like doctors.
Step 5: Trust your gut! Did you feel at ease after talking to them? Did they answer all your questions and explain things clearly?
Trust your gut but do many interviews. If you have not talked to at least three and even better five the first time around, and three the second time around, you are setting yourself up for failure which could cost you plenty.
About Michael Ross
Michael Ross is a 30+ year veteran financial advisor. After 30 years with Morgan Stanley, he is now an independent financial advisor who specializes in helping business owners exit their businesses and move to the next phase of their lives.