“My entrepreneurial Spirit was reincarnated after reading Rich Dad® Poor Dad and I began a journey that led to the achievement of being the most successful Facilitator of CASHFLOW® events in CANADA.”
Three questions for your financial adviser Make sure you take the time to ask key questions. Photograph by: Getty Images In most initial meetings with financial advisers, it is usually the adviser that asks a bunch of questions to see where they can be of service. Often advisers are armed with well-rehearsed questions to try to uncover problems so they can provide solutions. As important as this is, you should also arm yourself with some questions so you can also interview the adviser. A relationship with a good financial adviser is probably one of the most important professional relationships you can have. Make sure you take the time to ask key questions. Although there are a myriad of questions you should ask, here are three questions I think are important. How do you get paid? It's time to talk openly about compensation. After all, the investment industry is regulated in such a way that compensation usually has to be disclosed. Knowing how a financial adviser gets paid helps you to understand where some potential biases and even conflicts of interest may exist. The majority of financial advisers are commission-based, which means they sell products like mutual funds, stocks or insurance to make a living. It's important to know what kinds of products they sell. Do they only sell products from the company they work for or are they more independent? Even if they can sell products from many different companies, do they mostly sell products from one company? If so, why? In the mutual fund world, I am always amazed that people I come across have no idea if they bought their mutual funds with a back-end load, front-end load, low load or no loads at all. This is pretty important stuff. After all, I'm sure you don't want to be paying too much, or worse yet, get taken advantage of. Financial advisers deserve to get paid just like any other service or product business. At the same time, you deserve to know how they get paid, so don't be afraid to ask. Good financial advisers have no problem justifying how they get paid. What kind of research do you do? I've always said that one of the principles of successful investing is good research. Good research leads to good decisions. Research does not guarantee success, but it helps minimize mistakes. If research is so important, then why don't people ask how financial advisers do research? The best money managers in the world are the best because they have a disciplined research process and can articulate their process succinctly and easily. Ask your adviser about their process, discipline and beliefs. If you ask an adviser about research and they fumble around with the answers, chances are they don't have a research process. What is your service strategy? Studies show the two most common reasons people change financial advisers is because of lack of performance or lack of service. If that's the case, then why not ask the question right at the start? You should know what advisers do to service their clients and how often they contact their clients. Find out how often they meet face to face and whether they service all clients the same or differently. When it comes to service expectations, one great question to ask is, "How many clients do you have?" Many great advisers may be excellent at what they do, but they have a capacity problem -- too many clients to service. I think the biggest problem with service from financial advisers is simply managing expectations. Some advisers have become really proactive and offer formalized service guarantees or expectations right at the beginning, which simply sets the service expectations. Edmonton Journal |