Get References when Selecting a Financial Advisor

Some advisors consider "I have to go home and think about it" to be the brushoff. (Show them this article and tell them you are using it to help in the selection process if you feel compelled to reassure them of your sincerity.) You want and need that time, not only to do other interviews but to check references.

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.
You're not going to ask about the specifics of the other person's finances, and you expect them to be sweet on the advisor (after all, they are current clients); what you want to know that only a reference can provide is the tone and tenor of the relationship, things like "How does this advisor work with you, how does he respond when you don't take his advice?" (The questions to ask references are laid out in Chapter .)

Smart Investor Tip

If 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.

Key Points

  • 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
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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