Transcript

Hi, Everyone. Welcome to the Wiser Financial Advisor with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money.      

This is Josh Nelson, Certified Financial Planner and founder and CEO of Keystone Financial Services. We love feedback and we’d love it if you would pass it on to me directly at josh@keystonefinancial.com . Also, please stay plugged in with us and get updates on episodes and help us promote the podcast. You can subscribe to us at Apple podcasts, Google, Spotify, or your favorite podcast service. Let the financial fun begin!

I am glad to be back after a great summer with family and running around trying to have as much fun as possible while the kids were off school. Thank you for listening to the “Best Of” series we ran over the summer. It was fun for me and the team to figure out the best episodes from this past year.

Last week we talked about what makes a great Financial Advisor. You know, there are different ways that people get into this industry, and this week we’re talking about what makes a not-so-great Financial Advisor.

Really quick here, I’ll go over the main three points of what makes a great Financial Advisor that I talked about last week—and of course you could say that doing the opposite of those would probably make it not so great, but I’ve also got some other thoughts for this week that I’ll enlarge on in a minute here.

Number one, we’re just assuming off the bat that people have some basic communication skills and business skills, and that they’re reasonably intelligent. So we’re not really talking about that stuff. There are a lot of people that fit into that category, but what we’re talking about more is just their mannerisms, their personality, their approach to how they work with you, because what’s really critical is developing that relationship with your trusted advisor. When it comes down to it, advisors are guiding you through some very important stuff. We’re talking about your family’s financial future and a Financial Advisor is there to help guide you through the rest of your financial life and everything that’s going on during life transitions like going through retirement, making big decisions—such as when to retire or answering questions like, “How much can I spend? How should I invest my money? Do I need to carry life insurance or not?”

Your trusted advisor helps guide you through all these decisions. So last week we talked about three things that make a great Financial Advisor. Here’s a quick recap:

A great Financial Advisor needs to be a people person. That means having people skills; connecting with people and showing they really care. They’ve got confidence, but also humility along with the mannerisms and the personality that can connect with others. There has to be some kind of juice there in the relationship or people just aren’t going to click and it’s going to be tough to have a productive relationship.

People want to like the people they work with, and that goes for both sides of the relationship, right? As advisors we like to work with clients we like. It’s tough to work with people we don’t like, so really it needs to be a good fit.

The second trait I talked about last week that’s important for a great Financial Advisor is to be a problem solver and be creative about solving problems; to be able to collaborate with the client rather than just having a dictatorship where the advisor makes all the decisions and the client really doesn’t know what’s going on or has any say in it. Again, confidence, humility and being able to operate in an environment of uncertainty are all important; being willing to take action and make decisions, even though things might be uncertain.

Number three trait for a great Financial Advisor is to have the heart of a teacher and help people understand what’s going on in the financial world and with their money. It’s important to be able to educate people one on one or in a couple or in group settings whether in person or via webinar.

Those are all areas that are really important to be competent in or have the potential to develop that competence so as to have a successful advisor relationship.

Now this week we’re going to talk about what makes a not-so-great Financial Advisor.

There are a lot of things we could talk about here. We could talk about horror stories of Financial Advisors and so forth, but I quizzed my team and said, “Hey, what do you guys think; what are the things we hear about or we think would make a really poor relationship with a Financial Advisor?” I got their feedback and then threw some of my own in here as well. I’m curious to see how many downloads this episode gets versus the last one—the relationship with a great advisor versus a not-so-great advisor. We’ll see which one wins. I hope you’ll listen to them both.

So what makes a not-so-great advisor?

Absolutely number one is: you never hear from them. That’s pretty pitiful, I think, but it’s the number one reason that people leave their Financial Advisor. There have been numerous studies to substantiate that people most commonly leave a Financial Advisor because they never hear from them. The advisor doesn’t call back, doesn’t contact clients proactively or have ongoing meetings with them, and so people feel like, “You know, they’ve had my money and we never talked, I never really hear from them.” Or in a lot of cases, the advisor doesn’t respond to emails or calls from the client, which, to us is kind of crazy, but this is the number one reason that people leave their Financial Advisor.

We were kind of joking about it here, asking, “Is that a competitive advantage?” It actually is. It’s a competitive advantage to us that we actually call people back. We respond to people’s needs and their emails and we reach out proactively to make sure our clients have a next appointment scheduled, kind of like the dentist’s office. 😊 So, kind of unbelievable, but we hear this from people when they’re trying to switch Financial Advisors. They often say they’re leaving or they want to leave because they never hear from the advisor.

Okay, number two of what makes a not-so-great advisor is that the advisor is really a salesperson disguised as an advisor. In other words, they’re kind of salesy! They come across as a salesperson, and I think we all know what that feels like. We know when somebody is trying to sell us, we know when they’ve got an agenda. So really, it doesn’t matter what it says on a business card or email signature. It can say Investment Advisor, Financial Advisor, Financial Planner, but they’re a salesperson in disguise. You can tell when you’re talking, and you think, “This is a person just trying to sell me a product. They’re trying to sell me something versus acting as my trusted advisor.”

So what are the clues to that, other than instinct? Well, we can just kind of smell it because someone with an agenda doesn’t listen. They’re not a good listener, and it’s pretty clear that they have an agenda coming into the meeting and don’t care about you that much. They’re only asking questions or trying to start a conversation to introduce a sales pitch. You don’t want to have somebody doing that, especially with your family’s financial future. You want to have somebody who is a great listener and doesn’t have an agenda other than just helping you. An advisor needs to be trying to figure out how to be of service and add value in this situation.

And if we’re honest, sometimes there are situations where we just feel like we’re not probably a good fit. We probably can’t add value enough to justify the fees we’re charging.

So that will be a good clue: if someone is not a good listener. That would make a pretty poor relationship. An advisor should be wanting to know you and asking lots of questions, being curious about your situation before going in and proposing the solution to it. Having an agenda would be kind of like if you walked into the doctor’s office and without you talking a whole lot, the doctor just started throwing prescriptions at you and saying, “Well, you need to do this or do that,” –without looking at your medical file; without looking at your vital signs; without asking you questions about what hurts and so forth.

So it’s important you think about that relationship with a Financial Advisor the same way. You should be getting asked a lot of questions until they understand your situation really well before they start giving you advice or start proposing solutions or products or anything like that. The product should really be their advice. They shouldn’t be selling you a product such as an annuity or something like that, as the be-all end-all solution. The actual product should be who they are as an advisor and their firm’s ability to be able to help you.

Number three of what makes a not-so-great advisor is if they’re not ready for the big leagues. What I mean by this is, if you get the sense that an advisor is not really competent. Maybe they’re not very experienced, not educated versus a Certified Financial Planner (CFP) quality. You want a quality financial planner, a fiduciary. To quote Investopedia, a fiduciary is “a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust.” That’s really the gold standard in our industry. You want to make sure someone is a CFP and acting as a fiduciary at all times in your relationship.

It also helps if they’ve got years of experience in the area where you need help. If their niche is working with small business owners helping them set up retirement plans and things like that but you’re a high tech employee of a big company, maybe that Financial Advisor is not the best fit because experience is lacking in the area where you need help. In that case, your advisor should have a lot of experience working with other high tech workers, ideally at the company you work for. In a lot of cases, the benefits and things that you’re dealing with are very nuanced and need to be unpacked by somebody with experience. You don’t want to be the guinea pig. You don’t want to be the first person someone works with that has your particular situation.

It also helps an awful lot if an advisor has an experienced team. That way, you’re not working with just one advisor or planner; there’s a whole team on board. Ideally you’ve got a team with multiple CFPs on staff, a team with lots of professionals that reach out on a regular basis or maybe even have strategic partnerships with a big custodian like Fidelity or TD Ameritrade or Schwab, or relationships locally with attorneys, CPAs, trust officers—people that they can be pulling into your financial situation. When you think about the Certified Financial Planner profession, it started mainly back in the 1970s. The reason it became a vocation was because before that, people were left to their own devices to go out and find professionals in all these different areas. People had to act as their own financial planners and then go out and find an investment guide, probably a stockbroker at the time; find an insurance agent; find a person at the bank to help them; and find the human resources contact in their company to help with benefits. In the end, it’s important you’ve got somebody who can pull that all together into a plan, because most people don’t have the time, don’t have the desire, and don’t have the expertise.

Sometimes we can be our own worst enemy, in that if we’re our own advisor, we can only see things from our own perspective. That’s why I myself have a business coach, and I’ve had a business coach for a year. The thing that she helps me with is seeing things from a different perspective, one I wouldn’t be thinking of. As a Financial Advisor or Planner, a lot of times what we’re doing is pointing out things that might seem obvious from a certain perspective, but the person is just not seeing that because of being too close. We all tend to get too close to our own situation, our own business or vocation, whatever that is. We really need that outside perspective to be able to help make effective decisions and see things clearly.

If your advisor isn’t ready for the big leagues, you probably can sense that, but here are some things you can be watching out for–

Make sure you’re working with a Certified Financial Planner. There’s no reason to work with somebody who’s not a CFP. A CFP has fulfilled requirements that are fairly rigorous and had to pass education and a pretty hard test. They must have years of experience and pass a background check to make sure there aren’t any obvious black marks on their record.

You want to make sure your advisor is a fiduciary, and a CFP is required to act in that capacity.

And again, ideally you want to work with somebody who’s part of a whole team rather than out there on their own. In this business it’s important to have some redundancies in place so you’ll have somebody who can help you when your primary advisor is not available. What if something happens to that person? Is there a succession plan for who’s going to help you, or will you have to go out and find a new advisor at that point; if, say, your advisor dies or becomes incapacitated—or is there a whole team in place that’s still able to help you? I hate to be morbid, but things do happen, and so it’s important to think about your relationship with your Financial Advisor or Planner.

Here’s a different example of why you want to look for someone with experience in the area you need help with. Let’s say you go to an attorney and want help doing your estate documents, getting the will and trust and powers of attorney, all those sorts of documents done. Then as you start interviewing that attorney, you find out they practice family law. Well, that’s great if you needed a divorce or had some type of custody issue. But what if there’s no experience in estate planning?

So, are they a licensed attorney? Could they do legal documents for you to get your estate stuff done? Yeah, probably could. But when you think about estate planning, you want an attorney who does that a lot. If there is day-by-day experience, the attorney will be up to date with any rule changes and strategies that might work for you. Without experience, an attorney would probably just end up boiler-plating some documents for you, and it wouldn’t be that great. You want to find an attorney who specializes in estate planning or has that as a big part of their practice.

Same thing with Financial Planners. It’s best if they’ve got years of experience in the area where you need help. You can tell a lot by whether you get asked plenty of questions and get indications that your Financial Planner really understands your particular situation.

Another example: If you’re a high tech worker, you might have all kinds of equity awards that are specific to high tech companies. In that case, you want to make sure you have an advisor who understands how those work.

To sum up, what makes a not-so-great advisor–

Number one: You never hear from them. That’s the number one reason people leave their Financial Advisor.

Number two: The advisor is really a salesperson disguised as a Financial Advisor, one just interested in selling you products as opposed to acting as a fiduciary, a trusted advisor doing real comprehensive financial planning.

Number three: The advisor is not ready for the big leagues, not truly competent or experienced. Maybe they’re not educated, not a CFP, not a fiduciary. Maybe they’re just missing experience in the area where you need help.

So, if you’re looking for a Financial Advisor, and listening to this you say to yourself, “You know what, some of these things sound like the experience I’ve had;” maybe it’s time to start interviewing people and find a better fit for you.

If that’s us, great! I hope you talk to us if you’re considering a different Financial Planner. Speak to us, see if we’re a good fit. If we’re not, we’ll definitely tell you. If we’re not getting the sense that we’re able to help you or add value, we’re definitely going to tell you and help you get connected to an advisor who would be great for you and your family.

In most cases when people come to us as new clients, they have never worked with a financial plan or a Financial Advisor before, although they usually have built some great financial habits and are typically good savers. They’re good at taking some money and putting it away, building up 401Ks, buying stock, paying down debt. So they’ve got some good financial habits, but have gotten to the point where a couple of things are happening at the same time.

One of those is that they just don’t have time anymore. They’ve got all kinds of other commitments involving work and family and also just stuff they like to do for fun. They’ve got many things they’d rather do than go in to consult a financial expert. However, even though they’ve done a great job saving, investing, paying down debt, they start to get a little bit scared, wondering, “What if something were to happen to me?” If this is someone who’s married, “Will my spouse be able to take things over? Who’s going to take care of the children?” Those sorts of questions begin to get asked.

Or sometimes people start to think, “You know what, I did a great job saving, investing, paying down debt, but now I’m approaching the later years of my career. Maybe I’ve only got five, ten, fifteen years left in my career before I’m going to be retiring. I want to make sure the decisions I’m making now are not going to screw me up someplace. I’d like to be sure I’m on track and I’ve got an effective game plan that’s going to help me get to where I want to be.”

Another thing to think about when you’re considering connecting with a Financial Advisor: What kind of investor are you? What kind of person are you? Are you somebody who really wants to partner with a financial planner or are you somebody who’s geared to be doing this on your own? If it’s your hobby and it’s what you enjoy doing, then you probably want to just keep doing what you’re doing.

Frankly, some people are geared that way and want to spend their time researching finances in the market and so forth and being an expert in that area. If so, maybe that’s the best fit for you at this point. But if you’re questioning that and saying, “You know what, I just haven’t found somebody. Maybe I just need to go talk to a financial planner,” you’re invited to give us a try, talk to us, see if we’re a good fit for you. If we’re not, we will help you get connected to a financial planner who would be a great fit for you and your family.

That being said, I think this has been a great couple of episodes here for people trying to make decisions or maybe confirm whether you’re in the right spot or not.

Thank for helping us promote the Wiser Financial Advisor. You’ve been great about this; so many of you have pointed your friends, family, coworkers to us. If you like, you can send people copies of the episodes as links on our website. We have a website specific to the Wiser Financial Advisor and it’s just www.wiserfinancialadvisor.com

I hope you have a wonderful week, and God bless.

The opinions voiced in this episode of the Wiser Financial Advisor with host Josh Nelson are for general information only and not intended to provide specific advice or recommendations for any individual. Investment advisory services offered through Keystone Financial Services, an SEC Registered Investment Advisor.