Choosing An Advisor Is A Matter Of Trust

Yes, you need to find someone with experience in the field and the right credentials, but you also need to feel good about the person. This is someone in whom you are placing a lot of trust and personal responsibility. Often, clients will feel somewhat vulnerable with the thought of having no more money coming in once they've retired. They sit down in front of this "stranger" who is supposed to alleviate their fears and help them pave the road to retirement. Naturally, doubts may pop up.

Do I have the right person?
Am I going to be "taken"?
Is he or she going to do right by me?
Is he or she listening?
Does he or she understand what my fears are?

These are the questions you will ponder as you approach a meeting with a financial advisor. While you cannot protect yourself 100%, you have to go in with your eyes open. It's important to ask a lot of questions. Essentially, you want to interview an advisor as you would a doctor or any other professional with whom you will be working closely.

“The decision to retire is one of the biggest decisions you will ever make”

Find out how long the advisor has been in business and how accessible he or she will be, and ask for references. Call those references, and see what they have to say. Check the local Better Business Bureau, and see whether there are any complaints filed against the advisor. Ask around, and see whether other people you know have worked with this person. Often, the best way to find someone is by word of mouth. This doesn't, however, mean that someone your friend, neighbor, or brother absolutely adored is the right person for you. It's a gut feeling that you need to have that tells you this is someone you want to work with. It's not about the rate of return but about your comfort level. Over the years we have seen many couples come to us because the wife was uncomfortable working with a male advisor who talks down to her. Or, in other situations, the advisor is talking down to the couple because they don't meet his or her monetary expectations. Some of the larger firms provide an 800 number for individuals with less than $100,000 in liquid assets.

You don't want to work with an 800-number, or with anyone who is condescending. You want a real person ready to work with you. Additionally, you don't want boilerplate service. This is certainly not an industry where one size fits all, so if the advisor tells you that all his or her clients are doing such and such, then he or she is not taking individuality into account. A good advisor wants to hear what you have to say so he or she can tailor a plan to suit your specific needs. The advisor should ask about your needs and take notes.

He or she should ask:

What might happen down the road that could affect your net worth?
What dangers do you see potentially down the road?
Do you have parents who you may have to support, or children who still need your financial help?
How much longer do you see yourself (or yourselves) working?
What do you see yourself doing after you retire?
What is your biggest fear?

If those questions aren't being asked, chances are you're in the wrong place. Many people have doubts. In our opinion, if you feel uncomfortable, you may want to go somewhere else. Remember, it's not about rate of return but about finding someone who is going to communicate with you in the good times and bad. Too many advisors talk only about money, but the planning process is a lot more than that. You need someone who is trying to help you feel at ease.

Some red flags to look for include:

He or she is immediately trying to sell you something.
He or she does not ask you for a full and detailed background.
He or she talks in generalities about what "all my clients are buying."
He or she is making you feel intimidated or is talking down to you.
He or she has another job and is doing this as a sideline.
He or she isn't willing to educate you or answer your questions but prefers to utter the phrase "Don't worry; I'll handle it" or "Trust me."
Your gut feeling says, "Run!"

If any of these issues are going on, leave and don't look back. This is your retirement, so you need someone who can explain the best options for your personal situation.

The decision to retire is one of the biggest decisions you will ever make. Yet, it is also a decision that can be very difficult to reverse. Most retired people have little desire to go back to work. They truly enjoy their freedom. They relish living a life without deadlines (apart from the ones they are creating for themselves). Retirement can be the very thing to help people feel refreshed and looking younger. It is also a time when people redefine who they are, and what they want out of life.

What an exciting time it can be!