OK, that’s more than one question. And here are a few more related ones you may want to ask the financial advisor: How long have you been with this firm? How many other firms have you been with? What other career aspirations do you have?
Whichever way you choose to frame this line of questioning, your goal is to be assured you find an experienced advisor whose career is stable and is doing this job for the right reasons.
It is important to ask this question of a financial advisor rather than make assumptions about their experience. Remember, age can be misleading: Many advisors are career changers, and their age may be deceiving as they’ve actually been in the field for only a year or two. By the same token, someone who appears quite young can have nearly two decades of experience as a financial advisor because they are passionate about what they do and driven to help people.
Stability is equally important. Financial advisors are sometimes known to move from job to job, often because they’re offered a bonus from another firm –with the expectation they’ll bring their clients with them. You want stability from your advisor and to feel secure that he or she won’t leave any time soon.
Keep in mind that at many Wall Street companies, financial advisors are on a career track. They may be serving clients right now, but they might not have been in that role six months ago – and they might get promoted to another position in less than a year. Ask the candidate if they aspire to join the firm’s management team. While it is encouraging that this is a driven and capable individual, it means you’ll be assigned a new advisor when they advance in their career. Usually, this is someone you don’t get to choose and the timing is not of your own.
You want to hire a financial advisor who loves being a financial advisor. It’s their calling; their passion. That helps give you confidence that you’ll enjoy consistency and authenticity – and the longer you’re together, the better that advisor can serve you.
One related point: Be aware of the difference between investment managers and financial advisors. Investment managers limit their advice to investments; they don’t provide help with other aspects of your personal finances. Financial advisors, by contrast, can provide comprehensive investment advice -- and in addition to investments, they can help with guidance and education on tax planning, insurance needs, retirement planning, estate planning, Social Security, employee benefits, real estate and mortgages, leasing or buying cars, elder care issues and more.
Finding a good financial advisor means creating a comprehensive financial plan for you based on your goals, risk tolerance and circumstances – the same factors used to help determine the best investment strategy for you. Investment managers skip the other types of planning and immediately jump straight to investment ideas. We believe you are served best by creating a plan before choosing specific investments.