So you’re looking to hire a financial adviser? You’ve probably got your bank hassling you, some guy on LinkedIn, or a stock broker you met at a cocktail function. There is certainly no shortage of people offering to help you with your finances. Before hiring a pro to help you, here are three factors to consider before you decide who the right adviser is for you.
1. The numbers
When was the last time you waited in a long queue for something? Frustrating wasn’t it. This is certainly not the experience you want when working with your adviser. You want your affairs prioritised. You want your adviser to spend as much time as necessary in analysing your options so that you are provided with a well thought out and considered recommendation (not one that is rushed!).
If you’re looking for a service that is attentive and personalised (not ‘off the shelf’), advice that is pro-active and well considered, your adviser should be ideally advising around 55 to 65 families. Any more than this, it is likely that some aspects of your service will be compromised.
So find out…how many clients or families do they advise?
2. Comprehensive planning
If you’re looking to hire a financial adviser, you’re likely to want someone who takes into account your entire situation – even if they don’t provide you with specific advice in every aspect of your affairs. Knowing where you’re at, what you hold and why, is very valuable when making holistic wealth decisions.
Lot’s of advisers will tell you they take your entire situation into account. Don’t just take their word for it, ask them how.
Each decision you make today will have an impact on your tomorrow. Making sure your adviser takes your entire situation into account when providing you with advice and recommendations is crucial. In the end, that’s what your adviser is there to do – bring together all the bits and pieces to put together your financial picture.
3. The investment philosophy
Staying disciplined through the gyrations, and heart-stopping rises and falls of modern markets isn’t always easy, yet it’s crucial for your long-term investment success and is the foundation of a solid investment management process.
Ask your adviser to describe to you, in simple terms, his or her investment approach. And listen to their response. Carefully.
Do they have a structure? Is there a philosophy, a belief? Are they jumbling their words? Do I believe them? If there is a philosophy, is it documented? These are all questions that are likely to go through your mind while your adviser is speaking.
Is your adviser making decisions based on speculation, a ‘gut-feel’, chasing last year’s winners, or based on a ‘buy-list’ of stocks or funds? Maybe they’re buying and selling stocks frequently?
Your adviser should have a clear and simple methodology. One that is structured and systematic. A system that is persistent and pervasive. One that is based on a rigorous due diligence process where research and hard, factual evidence is the foundation of all decision making. Make sure the odds of financial success are in your favour…and not your advisers.
Next time your adviser makes a recommendation, ask them what the purpose or the objective of the investment is, and how it relates to you personally. Their response will give you a good indication of how well they know you and your priorities.
Above all else, you need to find someone you trust, and someone who gives you the information and guidance to make confident decisions. After all, it’s your financial future.