The Capitalist Investor - Episode 82

Choosing the right financial advisor to work with can be a difficult decision. To have a smooth stress free retirement it is clearly an advantage to bring in an expert to manage your retirement strategy. Mark and Derek discuss what you should ask when meeting with a financial advisor you are thinking about working with.

Outline of This Episode

  • [1:22] #1 – What part of your financial life do you need help with
  • [5:38] #2 – Different types of financial advisors
  • [9:28] #3 – What financial services do you require
  • [15:30] #4 – What can you afford
  • [18:20] #5 – Do your research
  • [23:00] #6 – Make sure your questions are being answered
  • [24:14] #7 – How are they different

#1 – What part of your financial life do you need help with

What part of your financial life do you need help with? Everyone’s financial situation is different. Are you approaching retirement and want to know how much you need to save so you can retire? Do you need a comprehensive financial plan, life insurance, investments? What stage of your life are you in and is an investment portfolio a major concern for you at this moment? Do you want to sit in front of CNBC and Fox Business all day managing your own portfolio, or would you rather enjoy your family and friends?

The best thing to do is prioritize those areas, we want to help educate people to find a good fit and hone in on an advisor that will be right for them. If an advisor is just selling you on how great they are and there is not a series of qualifying and disqualifying questions, on both sides of the table, you could be setting yourself up for failure. Both parties must be a good fit for each other, and an advisor should want to learn about your situation. Only trying to gather clients regardless of their needs is setup for failure.

#2 – Different types of financial advisors

Learn about the different types of financial advisors. How are they paid? Flat fee, commission based, included in the AUM fee? Are they a Fiduciary and acting in the best interest of the client? Listen to see what we think on the structure and how it has changed over the last decade.

#3 – What financial services do you require

Choose which Financial Advisor Services you need. Investments, pay off your credit cards, budgeting, insurance, tax planning, retirement planning, estate planning, college planning…etc. Number One on the list is that the best financial advisors listen to you and they solve your problems. Financial advisors should focus on what is most important to you. They should focus on what you need and understand your problems, your concerns, strengths, and what can help fill that gap. A financial advisor should be there and understand what their priorities are as it relates to working with you to optimize your financial situation.

#4 – What can you afford

Decide how much you can pay for your financial advisor. Hear our take on what we feel is an appropriate ballpark figure for fees. Is that fee all inclusive? Look at the fine print. Making a valid decision and knowing if it’s a reasonable decision.

#5 – Do your research

Research financial advisors. Do your due diligence on potential financial advisors and where you go to seek information. We think you should know what to look for and asking for a resume and why they got into the business are big ones.

#6 – Make sure your questions are being answered

Make sure they answer your questions directly. If you are working with an advisor and they talk in circles, and never actually get to answering your question, you should not feel comfortable working with that person in the long run.

#7 – How are they different

How are they different from their competition? You should ask any prospective financial advisor that you are interviewing what makes them different from their competition. If their answer is weak, they are a commodity. There is nothing special about them, might as well keep looking. Keep looking until you find someone who can articulate their value prop, who can articulate what makes them different from their competition. Most importantly, trust your gut.

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