You will probably have an initial meeting before you sign on the dotted line. You may spend about an hour together discussing your goals and concerns and specific questions. It might be by video, but it more typically takes place at the adviser’s office. Above all, do not be intimidated, whatever your limits of financial sophistication. This meeting is partly about chemistry, whether you click and feel comfortable.
Smooth interactions
How do you typically like to conduct business? You might enjoy extra support and like to know an adviser is highly accessible to your ongoing needs. Or you might prefer to let them get on independently nurturing your money. Should they be permitted to transact autonomously without your permission?
Do they offer services that dovetail with your individual needs? Are they experienced in tax or estate planning, or do they partner with someone who is? Is their emphasis on investment and wealth management? In any case, will they help further your financial education as you work together over the years? Do you feel they would be patient and open to training you in the basics of investing?
Communication should be clear and transparent. Most clients would prefer their advisers talk to them in plain English, avoiding unfamiliar buzzwords or shoptalk. If they do spout jargon, that should be an immediate red flag. At the same time, you should expect respect, which means they ought not to talk down to you.
How much attention do you truly want or require? Is it worth paying for the added luxury of a highly tailored approach, or would a more cookie-cutter style be quite adequate for simple planning and investing?
Investment philosophy and strategies
You probably need some investment understanding to assess an adviser’s market investment outlook. If you are accustomed to a brokerage account, you will know whether you are more compatible with individual stock-picking or a broader-brush system using ETFs and sectors. There is no right answer, although contemporary investors tend to favor the latter.
Do they have any preference for large caps, small caps, income-generating stocks or international exposure?
Does the adviser appear to be encouraging asset preservation, growth or (most likely) a mix? A good adviser can help calibrate according to your age, current assets and risk tolerance. They should be able to explain their rationale logically to you. They must grasp your unique personal challenges. One size does not fit all. And pure number crunching will not solve all of life’s complexities.
Although your adviser is primed to identify your degree of risk tolerance, you may get some inkling whether you are dealing with a cautious or bold personality. At a preliminary meeting, it would just be a hunch. Are they promising too much? Remember how we learned from Bernie Madoff that guaranteed returns are too good to be true?
Life values
As you get to know your adviser, you will gain a better sense of who they are as a person. If all they do is balance your portfolio, it might not deeply matter where their heart lies, but to the extent they are structuring the economics of your life, it would be ideal if you shared a similar viewpoint.
Within the time allotted, you might ask a few leading questions, such as, what do you enjoy doing outside work? How did you get started in this business? What gives you the most satisfaction in your job? (Most are likely to say they like helping people solve financial challenges.) If the interview is going well and you have a couple of extra minutes, you might tactfully inquire why their last couple of clients stopped using them. You may get some telling responses!