A new year means new resolutions, and for many people, that includes getting their financial house in order. For many, that might mean getting professional financial help.
Retirement planning, reviewing your investing strategy, and setting up an emergency fund can be a lot easier with a financial advisor. My firm studied millennials and their money and found that a large number aspire to start financial planning — and many would like to have their serious investing handled by a professional advisor.
For many people, however, the prospect of meeting with a financial advisor can be intimidating and stressful. Establishing a productive working relationship with a financial advisor doesn’t have to be difficult, however. Just remember that the right financial advisor can be immensely helpful, as long as you know what she can and can’t do for you.
One way to get the most out of your financial advisor’s services is to think about what you shouldn’t expect. Avoiding certain questions or expectations will ultimately serve you better by keeping the focus on smart planning.
With that in mind, here are my six tips on what not to say to a financial advisor.
1. “Just do whatever you want; I trust you.”Although it’s important to trust your financial advisor, you’re still the CEO of your household’s finances, and you should take an active role.
Take advantage of the time you spend with your financial advisor and soak in the knowledge. Learn how proper financial planning and investing works. Learn some basic terminology and be involved in determining whether something is risk-appropriate for you.
If you understand what you’re invested in, you’ll be able to determine whether an investment portfolio has met your planning goals. And most of all, just like meeting with a doctor, lawyer or other professional, the better the communication you have with your advisor, the better your likelihood of long-term success.
2. “What’s your performance?”This is the million-dollar question, and one that many clients ask at the very first meeting with the financial advisor. But without knowing all of your financial planning factors, it’s impossible for someone to give you a true answer.
I tell my clients it’s like looking at an empty lot where you plan to build a house and asking someone whether you should buy a red sofa. You need to settle on the architectural plans long before picking the furniture, just as you should have a proper financial plan before delving into investment selection. Because every investment has different performance and fees, performance numbers will differ based on what your overall goals are.
3. “Can you get me tickets to the Super Bowl?”You’d be surprised how many advisors have been asked a variation of this question. Remember, your advisor is here to manage your investments. He or she certainly isn’t allowed to give out big gifts. In fact, the investment regulatory powers that be clearly prohibit financial advisors from doing so.
4. “Who else do you manage money for, and what are they invested in?”Financial advisors are bound by strict client confidentiality rules. Speaking with you about your money is similar to your doctor or divorce attorney speaking to you about your health or legal issues. What is said to us, stays with us.
5. “I was introduced to you by ‘so and so’ … I want what they have.”Unless you’ve been cloned and are the same exact person as the friend who introduced you, this isn’t the best idea. As advisors, we must consider each client’s individual preferences and life experiences when building a customized portfolio. It’s also known as the “Know Your Client” rule.
6. “How busy are you? I want the advisor with the most free time.”If you needed medical care, would you go into the hospital and look for the surgeon with the most open calendar? There are always exceptions to every case, but often this will lead right to the rookie in the office, or someone who’s in low demand for a reason. Experience and reputation create demand; that’s a good thing, not a bad thing.
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Winnie Sun is the founding partner of Sun Group Wealth Partners in Irvine, Calif.