3 Ways to Prepare for Your First Meeting with a Financial Advisor

3 Ways to Prepare for Your First Meeting with a Financial Advisor

June 13, 2021

The process of meeting with a financial advisor for the first time can be intimidating. You are stepping out of your comfort zone into an office with fancy decor, meeting with someone in a nice suit who speaks in terms you may not understand, and being asked questions you may not know the answer to.  

It doesn’t have to be intimidating, though. Behind the fancy terms and nice suits are people. Many of whom are highly interested in helping you. Sure, some are in it to try and sell you a product, but hopefully this article will give you the ability to separate the good apples from the few bad ones. Because the truth is, a good financial advisor gets into the industry because they see an opportunity to use their strengths and gifts to help people and to make a difference in their clients’ lives. 

Here are 3 ways to prepare for your first meeting with a financial advisor so you can get the most out of this meeting.

Tip #1 — Interview the advisor.  

Not all advisors are created equal, and while it may start to feel like the advisor is throwing a lot of questions your way, don’t be afraid to turn the table and interview the advisor. Asking a few important questions can be crucial in guiding you towards the all-important decision of choosing who you will trust with your hard earned money.

Here are a few examples to get you started: 

  • How are you compensated?

A good financial advisor doesn’t shy away from being upfront about their fees. In fact, they actually welcome the conversation because it allows them to be transparent with their clients. 

  • Are you independent?

This question helps to expose any potential conflicts of interest. Non-independent advisors are not necessarily bad, but just understand that they will be more limited in their investment choices for you. However, the tradeoff can be an increased level of service as most non-independent advisors work for large wire houses who have excellent service models.

  • Are you a fiduciary?

Being a fiduciary means the advisor has a legal obligation to choose what’s best for the client. This puts a responsibility on the advisor, but it also can provide you with some confidence that the advisor has your best interests at heart.

A good advisor is competent, well intentioned, and service oriented. Which brings us to the next question you should ask the advisor:

  • How important is client service to you?

This is a relationship business. When you hire an advisor, ideally you are hiring them for the long-term. Much like your family doctor, your financial advisor gets to know you. They get to know your goals and your dreams. They know a lot of personal details about you through understanding the intricacies of your financial situation. This is why they are in a prime position to help guide you through the many tough financial decisions you’ll face in all stages of life.

Finding an advisor who is devoted to delivering an excellent client experience will save you years of frustration. You need to know that your advisor is always a phone call away. Ask the advisor how important client service is to them and how this plays out with their current clients. Advisors should welcome the opportunity to brag about how well they treat their clients.

  • Who is involved with the planning process?

Is it just the advisor? Or does he / she have a team behind them? Remember, finance is very complex and there can be certain advantages to having more than one professional looking it over. This second set of eyes might catch certain strategies or ideas not found the first time around.

  • What are your designations? What did you have to do to obtain those?

This can help you separate those who are just getting their feet wet in the industry, from those who have a track record and proven experience. There is a wide spectrum of advisors when it comes to experience, knowledge and expertise. If you are not comfortable asking the advisor to talk about their experience, an idea is to grab their business card on the way out and do a little research on their designations.

Tip #2 — Think about your goals

When preparing for your first meeting with your financial advisor, you should know that the advisor will be asking you about your hobbies, interests, lifestyle and future financial goals. Think ahead of time about your view of money, what you want money to do for you. Are you simply looking to get by and pay your bills, or do you have things you’ve talked or dreamt about, perhaps with your significant other? Do you wish to travel more? Retire early? Buy a vacation home? Fund your children’s education? Make a financial impact on a local charity? Be as specific as you can.

A common practice is to list out your financial goals, then prioritize them. What are the things you expect to do with your money at some point in the future and what are some things you dream about?

Try and separate where you think you are at financially from these dreams. For example, you might be tempted to think “I could never retire in West Palm Beach. While it looks amazing, I’ll never be able to afford that.”

While it is important to have realistic expectations, it is also the job of your financial advisor to help set these expectations with you. Many times we fail to realize our dreams because we don’t strive for it in the first place. The planning process is sitting down and looking at what it will take to accomplish our dreams — big or small.

Maybe that dream of retiring in West Palm Beach is possible if you picked up a second job, or waited 5 more years than you were expecting to retire, or maybe it is entirely possible and you’ve been on track all along — you just didn’t know it. That is why a financial plan can be so beneficial. It is revealing. It puts you in the know. It puts you in a position of control.

Tip #3 — Be aware of this red flag 

One of the things that should raise a red flag for you is if the advisor focuses too heavily on their past investment performance. If they brag, spend a lot of time talking about how well their investment choices performed, promise a certain return or make you believe that somehow their funds will always provide a higher return than other advisors, this is a red flag.

New investors learn very quickly there is no surefire way to consistently beat the market. That’s not to say beating the market is impossible, but to do it year after year and to predict it will happen again next year, and the year after, just isn’t reasonable. Hiring an advisor with the expectation that somehow your investments will outperform the market, or outperform another advisor, is really setting yourself up for disappointment. Sure, benchmarks are important, performance is important, but when an advisor starts to try and sell you on big performance promises, you should tread carefully. 

Instead, a good financial advisor will often downplay performance. They will instead tell you that the key to achieving your financial goals is to establish a sound plan, to follow the plan, and to not veer off course when the inevitable short-term ups and downs in the market occur.

Remember, as mentioned earlier, hiring an advisor is much like hiring a doctor. Only instead of your physical health, you are looking for someone to improve your financial health. Shop around for the right one for you and, in your search, look for someone who you can connect well with, someone who is competent, someone who is committed to a high level of service, and someone who you are certain is looking out for your best interests. When you find all of that, you’ve put yourself on the path to a better, more secure financial future.