Finding The Right Advisor

How do I know if I’m working with the right financial advisor?

First of all, it’s important to lay it out there that different families and individuals need or want different levels of advice.  As your wealth increases, or there are more complicated variables or transitions in your financial life – think retirement, inheritance, equity award planning or being a business owner, the need for more customized financial planning may have warrant.

Financial Advisors have varying degrees of experience, knowledge and team infrastructure in order to provide raving fan service.  Today, we’re going to focus on 3 questions to consider when selecting a formal advisory relationship.

  1. Does my advisor proactively bring solutions to the table to help me save money and execute on what they promise? Here are some examples:
    • Portfolio rebalancing and tax loss harvesting– although these are common practices in the industry, it can be difficult to execute for all clients when the market shifts rapidly. 2020 was a great example of using market conditions to your advantage to purchase equities at lower valuations in March and locking in profits later in the year.  Tax Harvesting was another great opportunity to offset future gains resulting in real tax savings.
    • Reviewing your prior year tax return
      • It’s easy for individuals or even CPAs to miss items like 529 deductions and retirement contributions. Tax returns also enable planners to look for important opportunities.  Having an advisor who is competent in tax planning, especially as your wealth increases can make a big difference.
  2. Next Question: What topics do you consistently talk to your advisor about?  While investments and retirement projections are very important pieces of the puzzle, money management, tax planning, family estate planning and legislative changes often require similar or even more attention.  Holistic advisors should address all topics related to your finances.
  3. Last Question: How and how much are you paying?
    • As you may know, there are different billing structures for advice ranging from trading commissions, hourly billing, flat fees and billing as a % of your assets. Comprehensive planners acting as a fiduciary are often fee-only or fee-based.
    • There is no right answer when it comes to your billing structure, but you should feel comfortable asking questions and understanding what’s going on under the hood. Building a trusted and transparent relationship for you and your family is extremely important, and you should feel you’re getting immense value for an expense that may be your largest.

If you have more financial questions, don’t hesitate to ask your Family CFO.  We do more so you can too.

Disclosure:  The opinions voiced in this material are for general information only and are not intended to provide specific advice for any individual. Examples contained herein are for illustrative purposes only based on generic assumptions.  This is not an offer to buy or sell securities, nor does it represent a specific recommendation.  Please speak with a qualified tax, legal or investment professional before making any changes to your personal situation.

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