Working effectively with an advisor

Not everyone needs an advisor. If you know how much to put toward debt repayment, how much you need to save, and how to invest it, you can go it alone. But if you have no interest in doing the planning and the math, or in making product choices, you may be well served by hiring a professional advisor.

A common mistake is to think, essentially, the more the merrier. Working with multiple advisors inevitably leads to conflicting advice. Further, since no advisor knows your whole situation, the advice they give may not even be appropriate. Choose one and consolidate. The most important point is that you find an advisor you can trust. If there is trust, you can follow the advice, knowing it’s in your best interest. You can also keep your affairs simple.

Working with a good advisor requires being able to identify one, preferably in the first hour that you meet with him or her. The following are some characteristics that should help you determine the quality and professionalism of an advisor.

A good advisor will take a holistic view. This means that they won’t dispense investment advice before fully understanding your cash flow and your goals. They won’t focus solely on one product, such as insurance, as a solution to all your needs. They will probably ask many questions and have you provide as much information as possible about your finances before they even formulate a plan. It is simply not effective to manage your finances based on generalised rules of thumb. What may be appropriate for most people might not even apply in your situation.

The meaning of professional, to me, is to always work in the best interest of the client. Your advisor should be willing to take as long as necessary to help you understand what he or she is recommending, and why. They should also answer all of your questions, to your full satisfaction. A good advisor is willing to explain how they are paid and should have no hesitation in explaining why their method of payment is best for clients. They will probably already be successful, so you shouldn’t ever feel any pressure from them to commit to a strategy or product that you are unsure of. Before hiring an advisor, it may be helpful to attend an event with other clients, and ask them about their experiences with the advisor. (Keep in mind that unhappy clients probably won’t attend events.)

Both the advisor and client are adults, entering into a mutually-beneficial business relationship. In order to make the relationship successful, the following responsibilities rest on both the  advisor and the client. Ensure that there is consistent and regular communication. If your advisor hasn’t phoned you in six months, consider calling them. There’s no harm in asking them to set a meeting with you to review your progress, or just asking them to review your situation and contact you back with any advice they may have. If you are saving and investing, three of four review meetings a year might be helpful. If you are retired and spending, just one meeting per year may be adequate. You also both need to be accountable for promised actions. If your advisor has recommended completing a task, such as renewing a mortgage, executing a will or even completing a home inventory, that advice is worthless to you if you don’t follow it. They should ask you about whether or not you kept your commitment. By the same token, if they promise to call you to set an appointment, prepare paperwork or send you documentation, you should make a note and expect them to follow through.

Part of working effectively with an advisor is being a good client. It is important to take an interest in your affairs. After all, it’s your future that’s being built, and no one is more interested in your success than you are. If your advisor feels that their advice is unappreciated, either because it’s not followed or it’s constantly questions, they will probably hesitate to continue advising the client. Having said that, ask any questions as they arise. It is helpful, for both parties, to air questions that help clarify what is being discussed. This helps you feel confident that the advice is appropriate and helps the advisor to know that you understand.

Questioning the validity of advice or second guessing the suggestions or intent of the advisor is counter-productive to a healthy relationship. If you find yourself doing this, chances are that there is little trust. If you are the type of person who doesn’t trust anyone, you will probably be more successful managing your affairs on your own. If you simply don’t trust your advisor, there is nothing to stop you from looking for a more trustworthy advisor in the meantime.

There are two main keys to having an effective working relationship with an advisor. You must both take equal responsibility for the relationship. Clearly communicate what is important to you, and how you would like to work together. Then, follow the advice that’s given. Take the actions that are suggested. It requires that both the client and the advisor act as mature, responsible adults.


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