Tuesday, September 27, 2022

How To Best Sell EIGHT QUESTIONS TO ASK YOUR FINANCIAL ADVISOR

Best Eight questions to ask your financial advisor

Don't get bogged down in exact distributions, but I would argue that one-third of the changes have been forced as a result of increased rules, regulations, and internal controls; another third in response to public demands for greater transparency and cleaner procedures; And the last third resulted from the industry's natural progression towards refining their role.

I published a piece titled "Eight Questions to Ask Your Financial Advisor" in 2004. Five years later, the landscape has changed in many ways, though not fundamentally. First, the changes:

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The thirteenth bear market, by my count, since the Great Depression
The housing bubble accelerates, freezes, then bursts
Mortgage derivatives failed, resulting in a banking crisis that continues as of this writing
Bernie Madoff uncovered the largest 'Ponzi scheme' and largest financial fraud in history, setting off a domino effect while uncovering a dozen (or so) other massive frauds nationally and internationally.
The financial services industry has come under heightened scrutiny and those within the industry are working faster than ever to define their roles and responsibilities.
It is this last bullet point that I want to focus on in this newly revised 2009 'edition' of the article of the same name. And in doing so, I'll also outline the fundamentals at the heart of the advisor selection process.

So how has the financial services industry changed and why? Don't get bogged down in exact distributions, but I would argue that one-third of the changes have been forced as a result of increased rules, regulations, and internal controls; another third in response to public demands for greater transparency and cleaner procedures; And the last third resulted from the industry's natural progression towards refining their role.

I won't discuss the rules - you can find them easily The public response seems obvious because most people just want to know "how it works," "what it's supposed to do," and "what it costs." Regarding the regular development of the sector, I clarify three things:

(1) There has been a clear shift from "commission-based" services to "consultative services" over various types of "fee-based" services or "brokerage services". By charging a fee for an ongoing service rather than a specific transaction, there is a belief that the advisor's interests align more closely with the client's interests over time.

(2) The focus has shifted from financial instruments to financial planning, with a focus on the client's intermediate and long-term goals and less often on firm-specific or product-specific strategies and systems.

(3) Finally, there has been a tendency towards specialization rather than generalisation. In this regard, the industry recognizes that the complexities of a family or business are as real as the complexities of the market, and therefore a range of specialists will be needed to prove a full and complete level of service. ,

It should be clear that each of the three fields has considerable diversity and momentum; Some of this stems from positive flexibility and disagreements about which approach works best. Fees include plan fees, retainer fees and asset fees. Plans include life plans, retirement plans, income plans and succession plans. And within specialization, there are internal teams, teams in formal networks, and sole practitioners The balance of this article is not to attempt to answer these details, but rather to provide you with some basic questions that will hopefully lead you in the right direction toward a solution that works for you.

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Without further ado, here are the new "Eight Questions to Ask Your Financial Advisor":

(1) Do you focus our efforts on a written plan based on my particular goals, using a thorough approach to financial planning?
(2) How will you communicate, initially and over time, what I'm paying you, how I'm paying you, and what I'm getting for it?

(3) Do you have any conflicts, limitations, or obstacles that I need to be aware of and if any arise, will you communicate them in the future?

(4) What is your core philosophy about your work? What results lead you to conclude that our work together is successful?

(5) Are you working as a specialist or a generalist? Regardless, who will coordinate the expertise I need over time to meet my changing needs?

(6) How often do you meet customers? What do those meetings look like and what communication methods do you use between meetings?

(7) Am I working with you directly, or through skilled assistants, and what processes should I expect as far as making and receiving phone calls, sending and receiving mail, etc.?

(8) I should not be concerned about any issue, theme or challenge despite what I hear through the media; An issue, topic or challenge I should be concerned about even though I don't hear much about it; And, how do you help me do that?

Clear communication should be a visible theme in these questions, and in this case, some things never change. So I'm done

Fees include plan fees, retainer fees and asset fees. Plans include life plans, retirement plans, income plans and succession plans. (1) Do you focus our efforts on a written plan based on my particular goals, using a thorough approach to financial planning?

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FAQ

What is the typical number of clients a financial advisor has?

In contrast, the average broker-dealer advisor has 118 ongoing client relationships, as well as 18 one-time clients and an average of 31 inactive clients.

What do the top 10% of financial advisors do?

The median annual salary for personal financial advisors in May 2019 was $87,850...the lowest 10 percent earned less than $42,950, and the top 10 percent earned more than $208,000.