Selecting a Financial Advisor: Advanced Due Diligence
Financial Planning
Choosing a financial advisor to help you manage your money and meet long-term financial objectives is one of the most important hiring decisions you’ll ever make. Think of your advisor as your “financial coach” – taking a lead role in coordinating the advice from multiple specialists and then implementing a plan so it is all working together. Consider asking these questions:
Choosing Research
- How much research do you have access to?
- How do you decide what to review and rely on?
- Is it all from internal sources?
- Is it difficult to manage your book and stay on top of all the critical research?
Model Selection
- Do you utilize some sort of asset allocation model?
- Is there more than one promoted within your firm?
- If so, how do you decide which to follow?
Product Conflicts
- Does your firm manage proprietary funds or strategies?
- Do you ever feel pressured into selling or promoting the internal product?
- Do you ever feel the firm uses compensation as an incentice to drive your behavior?
Clients vs. Research
- How do you spend your day?
- What percentage of your time are you focused on the markets, research and making investment decisions?
- What percentage of your time do you spend on clients?
- Which do you prefer?
Fund Due Diligence
- What is your view on passive vs. active management?
- Do you incorporate ETFs into the investment strategy?
- How many funds and money managers are on your platform?
- How do you narrow the field to the funds you beliveve in?
- How do you monitor the underlying funds and what's your sell discipline?
- Do you have a lot of third party wholesalers coming to your offices, buying lunches, etc.?
- What is your view on that?
- Is it just salemanship, or do you really learn something?
- How do you find the time to look at all the right funds?
Target Client
- How many clients do you cover?
- What is the average household size?
- Is your firm trying to build scale and shift Financial Advisor focus to higher net worth clients?
- How do they incentivize you?
- What would your CEO say is the ideal client in terms of liquid assets?
The right questions will tell you if a prospective advisor is right for you.
CRN202510-3187288