If you’re thinking about working with a financial advisor, remember it will be a relationship that could last many years, if not decades. This person will ideally be with you for the long haul, helping you and your family through each stage of your lives — so it’s imperative you find the right financial advisor for you.
Of course, establishing this connection is easier said than done, especially because we’re talking about someone who will come to know the ins and outs of your finances more than anyone else (even your mom). We asked Bill Taylor, vice president, financial planning and sales support for Northwestern Mutual, to offer some insight on how to assess whether a financial advisor is the right fit for you.
Q. A LOT OF PEOPLE FIND THEIR ADVISORS THROUGH REFERRALS. IS THAT A GOOD PLACE TO START?
Meeting an advisor through someone you know can be great. But there’s still a bit of a Match.com thing going on, where you may not be right for me, or I may not be right for you. For example, if you’re a business owner, then you might want to work with someone who has already acquired that expertise rather than someone who works mostly with people right out of college. It’s not good or bad, it’s just about making sure the expertise and your situation align. If it’s not the right fit, the advisor might be able to find someone else in their system or network who is better for you. Also, a lot of advisors would be happy to give client references, so don’t be afraid to ask.
Q. WHAT SHOULD YOU LOOK FOR WHEN YOU’RE INTERACTING WITH AN ADVISOR FOR THE FIRST TIME?
I think it’s important that advisors ask a bunch of questions to find out where you are and where you want to go. They may be able to figure some things out based on your age or life stage; for instance, if you’re 26, their gut may tell them that paying down credit card debt or college loans is important to you. But you can’t make assumptions about who you’re working with. You could be 45 and married with kids, but you may be a fiscally irresponsible married person with kids. A good advisor will still back up and ask the important questions to get to know you and your partner.
A lot of advisors would be happy to give client references, so don’t be afraid to ask.
Q. HOW CAN YOU TELL IF AN ADVISOR YOU HAVE TODAY WILL STILL BE ABLE TO WORK WITH YOU IN THE FUTURE?
An advisor has the responsibility to evolve with you. That’s where continuing education will come in. If I start working with you when you’re a 25-year-old MBA grad, then I know that your situation and your goals are going to get more complex over time. If you own your own business 20 years from now and have 75 employees, then I should still be able to help you. (And shame on me if I don’t know how to work with business owners by then.)
Also remember it’s likely you won’t be working with just one person; it might also be all the people who work with that advisor. He or she can still be the relationship manager while bringing in other people who can help you. That could be for anything from business planning to estate planning to special-needs planning.
Q. IS A GOOD PERSONALITY MATCH IMPORTANT?
Over the long term, personality fit can definitely be an issue. And you have to have a lot of respect and trust for each other. So I think you have to think about what it is you want. Do you want someone who’s going to be a tough coach, or someone who will put an arm around you? Even though I was an advisor, I still have my own. And I like my advisor to make me do extra laps.