Get References when Selecting a Financial Advisor
There is a potential problem here in that some firms do not provide references or give out only the names of people to whom they give professional referrals, such as a financial planner using the lawyer to whom he refers estate work as a reference.
Explain, as politely as possible, that client references will allow you to ask about the character of a relationship.
Smart Investor TipIf an advisor balks at references, ask for the name of the client who walked in just before you, or the one who had your appointment time yesterday, or who will have it tomorrow. The advisor always has a reason to call the people who just had an appointment, and since he is meeting with an established client tomorrow, he will be sitting down with someone he can tell about your request for a reference.
If your advisor is unwilling to give you the names of references (especially clients, rather than professionals, with whom there might be a business or monetary tie coloring the reference), he may not be worth keeping on your short list.
That's a tough call. References are an additional check and balance, but an advisor who uses confidentiality and convenience as an excuse to withhold names has not necessarily killed the deal, particularly if the advisor has addressed your reservations and if you found him through a referral from a friend or other financial counselor.
Having completed a detailed interview, armed with references, a sample plan and more, you can leave the office, go home, make comparisons, and discuss and mull over your advisor choice with your loved ones. Having repeated the interview process with at least one other advisor -- preferably two or more -- you should be comfortable making a decision that will pay off for years to come.
- Your initial meeting with an advisor is the time to get everything on the table and to gather as much information as possible, so that you can ultimately compare your candidates on a side-by-side basis.
- Do background checks before meeting an advisor for the first time. If you find trouble, save yourself the interview time, or get a good explanation from the advisor as to what went wrong and why it won't happen to you.
- An initial interview is not the last step in the process. You're not ready to hire someone until after these interviews are over and you have had time to evaluate what you have learned.
By Chuck Jaffe