Selecting An Advisor

7 Questions Empowering a Selection of the Best Suited Advisor for Your Situation

You’re a good saver, you’ve worked hard, and have funded lifestyle goals along the way.  You take pride in managing your finances, but cautiously for you are unsure if the amount of wealth you have amassed will provide for a comfortable retirement.  You’re also not confident in your ability to manage the complexities of investing and withdrawing in a tax-efficient manner. What’s your next step?

To put it simply, you need a wealth management team.

1. Why choose a wealth management firm rather than an investment management firm?

Wealth management firms typically offer services in addition to investment management. A wealth management team can offer guidance through all your future milestones and financial goals. Most people’s lives only become more nuanced and complex as time passes. Choosing to work with a wealth management team initially will save you the effort of switching from an investment manager to a team who can offer comprehensive services down the line.

Given the evolution of the financial services industry, searching for a wealth management team can often feel daunting. Anyone who has ever researched options for investment management and wealth planning can attest to that. The litany of choices can quickly become complicated and confusing, making the evaluation process overwhelming and full of uncertainty.

In an attempt to organize and simplify the process, let’s begin by exploring a few common terms you will hear, explaining their meaning, and discussing how they can help assess candidates along the way.

2. What exactly is a fiduciary and how can it impact you?

The term fiduciary has seen a resurgence in importance in recent years.

Acting as a fiduciary means the advisor has a legal obligation to act in the best interests of clients and put those interests above their own. The fiduciary duty also requires the advisor to avoid conflicts of interest and in situations where that’s not possible, disclose those conflicts so the client can provide informed consent.

Conflicts commonly surface when advisors sell financial products, such as annuities and insurance instruments, to clients while also collecting commissions on the sale of those products. You can see how this might adversely incentivize the advisor to sell those products to a client regardless of whether it’s in the client’s best interest.

3. What are RIAs and are they fiduciaries?

Registered investment advisors (RIAs) are Investment Adviser firms which, depending on their size, are registered with either the U.S. Securities and Exchange Commission (SEC) or with individual state securities authorities. Investment Advisers must adhere to the fiduciary duty in providing objective advice.  There are online databases to find Investment Adviser firms:

• NAPFA.org  (The National Association of Personal Financial Advisors) provides a database of financial advisors who have a fee-only structure and who are also fiduciaries.

• SEC Adviser Database is the SEC’s adviser search tool that can aid in your research for potential advisory firms. If the advisory firm is registered with the SEC, or with one or more state securities authorities, you can view information documented on Form ADV describing the firm’s business, ownership, clients, business practices, and disciplinary information.

4. What does “comprehensive” really mean?

Nearly all firms claim to offer “comprehensive” services, but what that means in practice can vary widely.

When evaluating potential advisory firms, a key factor in the decision-making process is determining what services the financial professional provides beyond investment management. Advisory firms at first glance may seem similar, but they may differ immensely in the range and depth of services provided.

By evaluating the additional education, experience, credentials, and expertise of staff members in key areas providing such advice, the differences in comprehensiveness of advisory firms can become clearer. A staff of CFP® Professionals is likely better equipped and trained to handle a wider and deeper range of personal financial issues.

Ultimately, the definition of “comprehensive” should be personal to you, in knowing that your wealth management firm offers all the integrated services needed to provide you peace of mind.

5. How can you evaluate a firm’s balance between planning advice and investment management?

Firms best suited to provide sound planning advice across multiple disciplines have staff with the experience and credentials to reflect that. If most members of the firm are investment professionals and administrative staff, then guess what: That firm’s approach is likely focused primarily on portfolio management, with little emphasis on integrated planning.

Asking about the firm’s personnel and team structure can help you figure out how much time will be devoted to your specific needs. As life becomes more complicated, it often takes a full team with varying areas of expertise to vet appropriate solutions.

6. Why might Accredited be the right choice for you?

We are not the right fit for everyone, but for those seeking to uncover the deeper meaning that wealth provides, you have found the right place. We are a fiercely independent team that believes in working with clients in a way that allows them to think differently about their wealth, their legacy, and their future. We work to give our clients peace of mind and confidence that the future they desire is attainable.

We believe in providing both quality and convenience. At Accredited, our clients have a dedicated team of at least four professionals analyzing their financial landscape, proactively identifying opportunities and risks, and implementing agreed upon strategies. As an independent firm, we coordinate an integrated plan by working directly with your outside advisors – accountants, insurance agents, attorneys, trustees, and bankers – to ensure there is a collaborative process implemented through all areas of your financial life.

Accredited was founded over 35 years ago with a focus on doing the right thing, in the right way, at the right time. Today we have had the honor of serving almost 600 families, and as we continue to grow we have taken steps to ensure we adhere to those core values. We have implemented an internal leadership continuity plan to ensure a seamless transition in the client experience, and our employee shareholder group is committed to remaining independent.

7. What questions should you be asking to help find the right advisor?

• Ask to see sample materials that will be used and presented if hired. Can the advisor explain it in a way that is easily understood, or do they provide a 50-page automated and indecipherable “financial plan” downloaded from standardized software?

• If interviewing a potential advisor, do they only spend time talking about their firm, their process, and their ”toolbox” or menu of services? Or does the advisor actively listen, asking questions about your values, your desires for money, and your most pressing issues to ensure the right fit?

• Inquire about the depth and breadth of resources that support the advisor’s planning recommendations. What is the composition of their team? If an independent firm, how do they work with outside advisors such as attorneys and tax-preparers? If part of a larger financial institution, how do they ensure that the products and services recommended are truly in your best interest?

• How long has the firm been in business and what are the plans for the future? If the team is new, it may signal poor retention. What are the long-term plans for the firm? As complexity increases, so does the importance of retaining a firm that has a plan to continue serving clients in the same fashion into the future.

Disclosure: The information presented herein is for general educational and informational purposes only, and should not be construed as investment, financial planning, tax, or legal advice. The views expressed herein are those of the author as of the publication date, and such views are subject to change without notice. Accredited has no duty or obligation to update the information contained herein. We believe the information provided here is reliable but should not be assumed to be accurate or complete.