In this video, Vision Capital Financial Advisors Sarah Quist CFP®, CDFA and Courtney Mersereau CFP® talk about the critical factors to think about when hiring your financial advisor. Your financial adviser is one of the most important relationships you will have. The person that you select will potentially know more about you than your doctor, your best friend, your spouse, or even your dog.
Sarah and Courtney discuss five of the critical factors that you should consider when hiring a financial advisor, but you can go to the Blog section of www.vcmi.net to read about all 10 factors. Be sure that you take the time to interview multiple advisors. You will be glad you did.
1. The first critical factor to think about when hiring an advisor is the fiduciary standard. It may surprise you, but not all financial advisors are legally bound to do what's best for you first and foremost. They may be operating under what's called a suitability standard. You should be looking for someone who is acting in a fiduciary capacity and therefore is legally bound to do what's best for you first.
2. Number two is fees. You need to talk to your advisor before you hire them about their fee. If you ask them point blank how are they getting paid and they look at you like what do you mean? Why do you need to know? Walk away. You need to know how they're getting paid before you hire them.
3. Ask about the advisor’s investment process and what types of vehicles you will be invested in. Are they using mutual funds, exchange-traded funds (ETFs), individual stocks, or a hedge fund to invest your money? All of these things matter because there are different costs associated with owning these specific securities. Lastly, think about the liquidity. Can you get your money back, or is it locked away for good and sorry key is gone you can't get it back for ten years.
4. Number four is custodians. You're probably thinking I've never heard that word before. However, if you've watched any NFL games or PGA golf tournaments you see them advertised all the time. Companies like Fidelity and Schwab. They're the firms that hold your investment portfolios. They're the ones that are critical in your relationship. People always ask us how did Bernie Madoff got away with what he did. It’s simple. He didn't use a custodian. You need to ask your financial advisor who will custody your assets. There are several custodians to choose from. Make sure the advisor uses a reputable one.
5. Number five. Personal fit. This is a very important one. You might equate it to dating when you're interviewing your financial advisor. Some people think that's a little out there, but it is you're having back and forth conversations you're getting to know each other. This is a really important because you need to make sure that relationship isn't stilted and awkward. Also, think about are how comfortable are you asking questions. Are they giving you space to ask questions? Are they listening to you? You should know that there are no stupid questions. We are not taught this stuff in school and, unless you have proactive parents, it's really difficult to learn the basics. Your advisor should be a safe space where you can learn.
Want to find out the other five tips? Read the blog at
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