How to Interview a Wealth Planner

Let’s say you find yourself with wealth. A fair amount of wealth. You could have earned it after years of hard work, maybe you inherited it, or had a lucky break! Maybe you have a job with the potential of growing, and you want to start building your wealth

But you don’t want to leave money in a bank, you want your money to work for you! You need a financial steward to help guide you. You need someone who understands your situation and has your best interest in mind. And you want to take action today. 

So you start the process of finding a wealth planner and encounter multiple professional individuals who want to help you. How do you know what questions to ask in order to find the right one? Having a bad financial advisor means you are working with someone who doesn’t have your best interest in mind. This may cause you to lose focus on what’s important to you, and even find it more challenging to fulfill your financial goals.

Discover the breakdown between the first and second advisor interviews, common red flags to look out for, and a handy interview checklist to follow along during your interview process! 

Let’s say you find yourself with wealth. A fair amount of wealth. You could have earned it after years of hard work, maybe you inherited it, or had a lucky break! Maybe you have a job with the potential of growing, and you want to start building your wealth

But you don’t want to leave money in a bank, you want your money to work for you! You need a financial steward to help guide you. You need someone who understands your situation and has your best interest in mind. And you want to take action today. 

So you start the process of finding a wealth planner and encounter multiple professional individuals who want to help you. How do you know what questions to ask in order to find the right one? Having a bad financial advisor means you are working with someone who doesn’t have your best interest in mind. This may cause you to lose focus on what’s important to you, and even find it more challenging to fulfill your financial goals.

Discover the breakdown between the first and second advisor interviews, common red flags to look out for, and a handy interview checklist to follow along during your interview process! 

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Interactive Advisor Interview Checklist

When it comes to your money, it’s important that you work with someone you can actually trust.
 
The questions in this infographic will help you get a sense of an advisor’s level of expertise, incentives, style, and legitimacy.
 

Questions For Your First Advisor Interview

Although there is no true “right answer” here, you need a wealth planner who, at its core, wants to understand your goals, aspirations, risks, and fears before making any recommendations. We refer to these advisors as aligned-interest advisors. 

We are big believers that the value-added of a great advisor is not to “beat the market,” but rather to be your household CFO.

If you want to find out how people are most likely going to behave, you need to understand their incentives.

As discussed in Financial Advisors, the Tell-All Series , knowing how advisors make money can help you identify the payment options that are most suitable for you. You’ll also be able to establish the most aligned incentives for the advisor.

For instance, if an advisor works at an insurance company and he/she gets paid high commissions for selling whole life insurance, there’s a good chance whole life insurance will come up as a suggestion – even if it’s not necessarily the best product for you

This goes back to our point on incentives. We’ve found that the incentives of independent advisors, who have no association with large broker houses, are more aligned with the interests of their clients.

This is because their practices don’t sell any financial products of their own.

The answer you are looking for here is “no.” To learn more, you can read Financial Advisors, the Tell-All series. Part 2: Brokers vs. advisors.

Your ideal advisor is one whose expertise lies in the areas in which you need the most help. For instance, an advisor may focus on Social Security and Medicare, but you’re 30 years old! You may need more help figuring out how much home you can afford or how to reach your long-term goals. Thus, that advisor is probably not the best match for you!

Other examples of financial planning services questions include:

If you’re having trouble figuring out which services you need, read Financial Advisors, the tell-all series. Part 4: Do I need a financial advisor?

There is no perfect answer here, but there are some very good responses and some very bad responses. The most important thing you want your advisor to have is a well-thought-out, evidence-based process. If  they sound like they are “winging it” or start discussing their stellar market performance when you ask this question, run for the hills!

Advisors simply don’t have the time to be your household CFO and be great stock-pickers. Great advisors understand that the key to success lies in first understanding the required returns you need to accomplish your specific goals. If those returns seem to have a reasonable margin of safety (considering historical return profiles for a well-diversified portfolio) then — and only then — are they able to pick the right mix of assets that strives to deliver YOUR required rate of return, with the minimum portfolio risk possible.  

Although this question should only be asked after the advisor has had a good chance to ask you about yourself, it ultimately cuts right to the heart of the conversation. Their answer should not only show that they have a good understanding of your situation but also focus on how they can help improve it and ultimately how you will benefit from it. 

A good indicator of a financial advisor’s expertise is whether they have past experience helping other, similar clients. If they fumble over the answer or if they don’t provide clear examples, then this could be an indicator that they are not familiar with working with clients who have similar needs to you. This is obviously a big deal.

Knowing where you stand financially is important, and you want an advisor who keeps you in the loop along the way.

Ask questions like:

  • How often do you expect to be in contact with me: once a year, monthly, or more?
  • Do you offer web services and portals?
  • Do you offer insight newsletters and reports?

At this stage, it may also be worth asking for examples of financial plans and asset allocations. Doing so will allow you to understand how their philosophy might actually materialize as a financial plan.

Questions For Your Second Advisor Interview

Understanding the quality and value of the financial plans an advisor creates can be the difference between a lackluster advisor and one who wants to accelerate your wealth creation and fulfill your financial goals.

By looking over a sample, you create an idea of what to expect from the plan the financial planner or financial advisor creates. 

A custodian is a bank or reputable brokerage where your investments will actually be held. A big red flag here is if the advisor is his or her own custodian (an example is Bernie Madoff.) If your financial advisor is independent, they are likely to work with a large reputable custodian such as Schwab, Fidelity, TD Ameritrade, or Pershing. 

Note that you shouldn’t have to ask this question. If during your first call the advisor hasn’t made it clear that they are positioning you for time in the market instead of timing the market, they’re not it!

An important benefit of hiring a wealth advisor is you’re not panic-stricken and worrying but instead focusing on the long-term, holistic financial plan you’ve put in place with your advisor.

This is an essential second interview question, so consider saving it for when you’re seriously considering hiring the advisor.

Look for a very well-thought-out process for onboarding you as a client. If they dilly dally or talk in circles, it’s a clear flag they’re trying to “close” you instead of entering into a fruitful relationship.

Carefully evaluate your expectations around the relationship. In some cases, a financial advisor may work with a team or another advisor. If they are, you’ll want to get to know who else will have a hand in your finances.

Remember that if you’re interviewing them with the expectation that they will be working directly with you, there should be no doubt about how the relationship will be structured. 

If you own investments outside of an IRA or other tax-qualified account, ask if the advisor requires you to sell everything and purchase selected investments. What are you are looking for here is will there be tax consequences in making the transition to the advisor managing your assets.

During a second meeting, most people ask about fees that they will be paying the advisor, without being aware that there are other costs associated with entering into a client-advisor relationship. In addition to paying the advisor an “advisory fee,” you will want to know what the underlying “investment expenses.” These are the fees you will pay for the financial products that the advisor picks on your behalf. 

Some advisors may seem less expensive than others in terms of advisor fees, but the investment expenses may actually be higher. Consider all-in costs while determining if the advisor you’re interviewing is right for you. 

significant number of financial advisor relationships last at least 10 years. Once you’ve found the right financial advisor for you, they’re usually for the long haul. That means it’s important you feel comfortable.

Holistic financial advice rarely exists in a vacuum. Asking this question allows you to evaluate your potential advisor’s network. If they’re unable to provide examples of other potential experts for you to refer to, you may find yourself grappling with finding another expert should the situation arise. 

Our purpose is to help you grow your wealth.

At Zoe, we spend hundreds of hours a year interviewing advisors. Of these, only the top 5% are accepted onto our network. So if you’ve used our matching algorithm, you can be certain that your advisor match has the right incentives, relevant experience, skills, processes, and technology to do a great job. With that said, it is just as important that you are empowered with the right questions to ask. Your confidence and trust is just as vital to the success of the relationship. 

If you want to learn more about how we vet the advisors in our network, to ensure they are of the highest caliber, you can read more about our selection process here.

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Let us connect you with the most qualified wealth planners