When selecting an advisor, you are the hiring manager. Even though the advisor presumably will have greater financial knowledge and should take leadership in planning and advisory tasks, you still have supervisory responsibility and should control the relationship.
While screening several advisors might seem like a lot of effort, remember that you undoubtedly want to engage the services of a genuinely ethical, objective, and competent professional advisor. Your advisor could have either a very positive or a very negative impact upon your long-term welfare. Make certain you know whom you have chosen to advise you on something as important as your financial affairs.
The primary purpose of an initial meeting is introduction and mutual assessment, and you should make the most of this meeting. You should not expect an initial meeting to result in any specific recommendations about your particular situation. A good advisor must do extensive investigation of your situation before making any specific recommendations.
Prior to meeting with a prospective advisor, do your homework. If the advisor has a website, read it thoroughly beforehand. Also, when you make an appointment, ask that a packet of information be mailed to you for review prior to the meeting. The website and/or written packet should include:
For some advisors, on-line registration information can be found, including Form ADV. (See: Online information about registered securities broker-dealers and investment advisory firms; also see additional links below that will help you to understand the regulation of advisors.)
You should expect that advisors with professional practices would have anticipated many of your questions. They will have already prepared written materials to answer them. Whether the advisor has such printed or online materials could indicate how efficiently the relationship will be conducted, if you were to hire this advisor.
These questions are presented in three separate articles:
You should decide which of these questions are most important to you. Since they are numerous, it will not be practical to obtain detailed answers to every question.
If an advisor resists providing any of this information, then be cautious and perhaps go elsewhere. An advisor’s openness to your questions can be just as important as the answers themselves. His openness may be indicative of how the advisory relationship would be conducted.
You need not to be in a hurry, and you should take the time you need before committing to an advisory contract. Selecting an advisor is an important decision and often leads to a professional relationship lasting many years. If the advisor tries to rush you, this is a bad indication.
In addition, if a prospective advisor is in a hurry to start working with you, this might indicate that there is nothing on this person’s schedule, and there is a lack of demand for this person’s services. Conversely, be wary of an advisor who is in great demand and has become overcommitted. Indications could be that he could not begin working with you for an extended period. This situation might make you question whether you will be given adequate attention, when you time on his calendar comes around.
Finally, be considerate. Better financial advisors are in high demand, and they must be efficient with their time. As you evaluate them, realize that they also will be evaluating you to decide whether they believe they can work well with you. If you are focused on less important details, he may recommend that you seek advice elsewhere. Nevertheless, a good advisor should never rush you through something that he should know is important to you.
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