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December 13, 2022

In a time of competition and an abundance of financial professionals, it is important to differentiate among the group.  Whether it be a personal relationship, a referral, or a random encounter, it is imperative to understand with whom you are working. Here are five questions to ask your financial adviser.

What is their WHY?  Why are they in this business?  What makes them get out of bed in the morning and strive for greatness?  The common answer is, I want to help others and educate the masses, however, the reality is much different.

As most of you know, I was a victim of a Ponzi scheme while playing major-league baseball.  It is taking me over a decade to gain an ounce of trust back in the industry.  I have attained my CFP® designation and continually educate myself and my team to look for landmines.  We consider ourselves protectors of our clients wealth, and we believe and educating individuals, empowering families, and engaging, small business owners in creating positive financial habits.

What is their philosophy?  It is important to gain a serious connection with your advisor and their philosophy. There are so many different philosophies out there about financial planning and you need to connect with what your financial advisor is saying. One financial advisors floss we may be investment management with risk mitigation, while another financial advisors, plus we may be to use insurance to offset risk inside of portfolios. 

Our philosophy is simple, on the investment side we want to achieve as much return per level of risk we are taking, and mitigate risk on our financial balance sheet. We believe in being incredible savers, and removing leakages within our cash flows while 15% to 20% of our gross income within both pre-taxed, post tax, and taxable buckets.  We want to help each individual become the best version of themselves for their family and their community.

Do They Follow Their Own Financial Plan?  Have you ever heard the term a cobblers kid never has shoes?  Ask your financial advisor if they are using the products and services they are recommending to you. If the answer is no have them explain why. It may be due to them being new in the business or not being in a position to afford the products at that time.

If an advisor is selling you, something that they would not buy I would question that advisor as to why they believe in the product. Again, a client may be at a different time frame in life, a different age group, and/or lifecycle.  Have the advisor explain why you need this product/service and how it benefits you the client.

Ask To See Their Balance Sheet?  If an advisor is asking you to open up your life and reveal your financial situation, they should not feel afraid to show you their financial situation. You want to work with someone that is doing the things they are preaching.  You want to work with those that are great stewards of their wealth so you can learn how to become a great steward as well. 

Who Do They Work For?  This is the last but crucial question. Who do you work for and how do you receive compensation?  Are you an investment advisor representative with a broker dealer, are you a financial professional with an insurance company, an investment advisor representative in a wire-house, or completely independent?  There are any number of ways an advisor what time is employment and compensation?

It is not that one is more preferable than the other, it is more about an understanding on how these relationships work. Some of the relationships are commission driven, while others are fee driven.  This is very important to understand because the relationship generally will drive most of the conversations.  Ask this question in conjunction with how they are compensated. This will allow you to make a decision on whether the relationship makes sense for you.

So the five questions you should ask, what is your WHY, what is your core philosophy, do you have or follow your own financial planning, may I see your balance sheet, and who do you work for and how do you receive compensation?  These core questions will help you decide if a financial relationship makes sense. If you have questions contact