10 Tips For Working With Your Financial Advisor

For many financial advisors, client service is paramount.  They live it, they breathe it, they instill it in their own employees.  Really good financial advisors are always trying to be better at client service.  So I am always astounded when I talk to someone who has been with an advisor for years and never hears from him, doesn’t think he or she is a very good advisor but they’ve never moved on to something better.  Family legacy?  Maybe.  Inertia? Likely.  As a client, you deserve better!

If you really don’t like your advisor, by all means – pick a new one.  There are plenty of brokers/advisors/planners out there that want your business.  But before you start asking the standard interview questions of different advisors, ask yourself this question first _

Have I been a good client?

I’ll let you in on an industry secret – Advisors spend more time on their good clients.  Shocking, isn’t it?

Of course,  some advisors will define “good client”  by the dollar amount of assets they bring to the relationship.  There’s only so much you can do about that.   But most advisors have a broader definition.   If you want to have a meaningful and rewarding relationship with your current or next advisor  here are essential actions you should take:

1. Trust

You need to trust that your advisor does have your best interest in mind.  Certified Financial Planners are held to a fiduciary standard that requires this, but what I’m suggesting here is more subtle than that.  Do you really trust your advisor to give you the advice that is best for you and your situation?  Don’t be taken in (or put off by) sales pitches.  Do you trust the person or not? Because you should.  And if you don’t – then why not?  I’ve seen many people mesmerized by an advisor’s reputation, size of office, client list (does the name Bernie Madoff ring a bell?) but they didn’t trust their own instincts.    Remember, to get the most out of this relationship, you are going to be divulging your innermost financial secrets, hopes and dreams for your money.  If you don’t trust the advisor, then you won’t tell them all that and then they may not give you the most appropriate advice and then you are going to be disappointed that things aren’t working as well as you ‘d like and come to a conclusion that the advisor steered you in the wrong direction.  See how this works?  You have to trust your advisor enough to give them your complete picture.

The flip side of this action item is that if you can’t muster up some trust for your advisor – you need a different one.  That you do trust.

2. Listen

At some point your advisor is going to ask you to do something with your money that you may not agree with.  That’s okay.  But until that time comes,  listen to her advice and ask questions if you don’t understand.  Good advisors spend time thinking about what their clients need, researching the options and summarizing the action items.  That’s why you are paying them.  If you are not willing to listen to their advice, why are you there?   If you argue about every recommendation, even the best advisor will eventually give up.   Notice I didn’t say FOLLOW, I said LISTEN.   Acknowledge the work and experience behind the recommendation being made.  Advisors love clients that ask questions and strive to understand their advice.  It’s a dialogue, but it’s not an argument.

3. Return their phone calls

Most advisors have many clients.  If they are calling you, it’s for a reason and usually one that is time-sensitive.  If you wait to call them back, an opportunity may be lost, a deadline may have passed.

If you feel you are being pestered with phone calls, set some parameters with your broker.  No one likes sales calls, so tell your super salesman of a broker that you only want to hear about certain investment ideas or you only want to hear from him once a month…As long as he knows the boundaries, he will usually respect them.  If he doesn’t – get a new broker.

The flip side is if your advisor NEVER calls you and you’d like to hear from him more often.  What do you want to know?  How frequently?  Fee-only planners tend to call clients less than commission-based brokers.  Discuss those expectations with the advisor and make sure it works in their type of  practice.

4. Go to your review appointments

Advisors don’t want to chase you down month after month to discuss their recommendations.   If you are not prompt, the recommendations get stale and lead to disappointment.  Again, understand the expectations up front.  Are you meeting quarterly, semi-annually, or just once a year? Does the advisor’s review schedule work for you?  Or do you really need someone who meets more or less frequently?  Whatever timetable you decide upon, stick to it.

5. Don’t wait until a crisis to ask your advisor to jump through hoops

If the only time you call your advisor is when you needed something yesterday, guess what?  Ever hear of The Boy Who Cried Wolf?  If you are following the advice in 1-4 above, however, chances are the advisor will stay up all night to help you.  Remember, the advisor has other clients, other work, vacation and oftentimes a family.  If you repeatedly call with a “must have immediately” need at 6:00 pm on a Friday, the advisor will stop answering the phone.

6. Pay your advisor – fairly and on time.

A simple but effective way to stay on the “good client” list.

With fee only advisors, the bill comes when the work is done.  Pay it.  But this action item also applies to relationships with commission-based and Assets Under Management (AUM) brokers as well.   You may not have to write a check, but find out how much compensation your advisor has received from you each year.    If you work with a commission-only broker and you aren’t doing any investing, chances are they aren’t going to have a lot of time to spend with you.

A general rule of thumb – if you pay your broker/advisor/planner between 1-2% of the value of your investments over the course of the year, the cost of their advice is probably reasonable.  If you haven’t spent 1% or you are spending more than 3%, you might need a different fee arrangement.  Do you really know how much you are paying your advisor?

7. Refer them to your friends

Advisors love these type of clients.  If you become a good referral source, an advisor won’t care if you ever do another trade with them. Carry a couple of her business cards, follow up on the referrals and generally be a vocal ambassador for your advisor. You will move to the top of the “good client” list in a hurry.

8. Separate the quality of the advisor from the quality of the market environment

Even the best advisors can’t control the stock and bond markets.  Make sure you don’t blame them for market movements.  Unless you are specifically with an advisor that specializes in market timing, your advisor is probably focused on the longer term.  Therefore, the advice he gives should weather multiple market cycles.    Read #1 again.

9. Don’t rate shop.

If your broker  performs the research and provides you a prompt answer, don’t shop for a slightly better rate somewhere else.  You may find  a better CD, a better insurance quote, a better performing fund.  But if you’ve asked the advisor to spend time researching that investment and taking care of your financial well-being, don’t put your money somewhere else for a tenth of a percent.

If you’re inclined to want the best deal no matter what, then do the research yourself and consider the impact on your commission-based broker.  Maybe you’re better off with a product-neutral, fee-only advisor who charges for time spent doing the research, not products sold.

10. Say thank you.

So simple, but so effective.  Advisors usually have a pretty thick skin.  They are steeled for rejection and can usually handle upset and angry clients with aplomb.  But they are human too, and need a little positive reinforcement once in a while.

To have the most rewarding relationship with your advisor, make sure you are a GOOD CLIENT.

About the author

Lea Ann Knight, CFP®

Lea Ann is the Principal of Garrison/Knight Financial Planning as well as the creator of the financial literacy site, Financially Fit After 40. She also writes a monthly column as the Money Expert for All You Magazine.

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