How good are your financial advisor's reading and writing skills?
"I would want to know that an advisor reads books on wealth management, economics, investing and retirement planning" to cover well-established information, plus trade publications which explore new directions, says financial advisor Rodger Friedman.
"The advisor should also attend, participate and learn from others at seminars."
And I would also want to know how an advisor invests his/her money, what his/her best - and worst - moves have been, and what the advisor has learned from these experiences.
The advisor should practise what is being preached, and shouldn't hesitate to share this information with you. So don't be afraid to ask.
As far as writing, Friedman says, the advisor should take copious notes during your financial planning meetings and periodically repeat back to you what you have been saying. Both these processes will confirm active listening, that the advisor fully understands both your finances and also your feelings.
But you must do your part, too, and be completely forthright with your advisor. S/he isn't there to judge you, or to criticize you for any perceived failings.
To help you with an effective financial plan, the advisor needs to know the truth, the whole truth and nothing but the truth - backed by all your personal and financial statements and documents. Advice based on incomplete information could well be more harmful than no advice.
Most advisors should offer a preliminary meeting, free of any obligation or sales pressure, to make sure both of you feel the relationship will be a productive one. The chemistry must be right; the advisor must be supportive and you must show trust.
Financial planners often earn their living by selling products, so you need to know the advisor is focused on your well-being, not her or his commission.
When you have chosen an advisor, regularly review the relationship - and once again, don't be afraid to ask questions. After all, it's your money: nobody stands to gain or lose as much as you from the financial planning process.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally. Email [email protected]
