Money Talk

Fer­ret out the fakes with th­ese un­ex­pected queries

Parents + Kids - - Editor’snote - Brian Hut­son is a fi­nan­cial concierge with Hut­son As­so­ci­ates

Fer­ret out fake ad­vi­sors with th­ese crafty ques­tions

Most peo­ple spend more time and en­ergy re­search­ing cheap flights than they do eval­u­at­ing their fi­nan­cial ad­vi­sor. This de­spite know­ing the in­dus­try is rife with fi­nan­cial char­la­tans who are ea­ger to pick your pock­ets clean with rec­om­men­da­tions that are heav­ily bi­ased in their fa­vor. It’s not sur­pris­ing as cheap flights are sim­ple and easy to find whereas dis­cern­ing a good ad­vi­sor is a dif­fi­cult process. How­ever, ask­ing the right ques­tions can go a long way to­wards help­ing you sep­a­rate the wheat from the chaff.

A re­quest for a re­fer­ral could have you call­ing a brother, and so-called cre­den­tials can be in­vented. What’s worse, th­ese huck­ster types are the most likely to be ex­perts in push­ing your but­tons just the right way to get you to do what they want.

How­ever, if you get crafty with your ques­tions, you stand a much bet­ter chance of know­ing which ad­vi­sors are best avoided.

For ex­am­ple, ask them what spe­cific train­ing they have re­ceived about ad­vis­ing cou­ples. Mod­ern, pro­fes­sional ad­vi­sors in­creas­ingly rec­og­nize that ad­vis­ing a cou­ple is a dif­fer­ent dy­namic than sin­gles and this re­quires spe­cial skills. Have they taken steps to learn more about how to serve their fam­ily clients bet­ter?

In­stead of ask­ing if they have a des­ig­na­tion ask, “what are your an­nual pro­fes­sional ed­u­ca­tional re­quire­ments?” Just ask­ing for their des­ig­na­tion is too easy to fal­sify. Any and all pro­fes­sions re­quire mem­bers to con­tin­u­ally up­grade their learn­ing. Mean­ing­ful des­ig­na­tions (there are lots of sham des­ig­na­tions out there) have ed­u­ca­tional re­quire­ments and true pro­fes­sion­als are fa­mil­iar with their obli­ga­tions and will gladly send you to their web­site to verify their sta­tus.

Make sure you find out what their pre­dic­tions are for the mar­kets and trends and what in­vest­ments are go­ing to be suit­able as a re­sult. If they give you any­thing other than a de­fin­i­tive “I haven’t a clue,” watch out. No one knows the mar­kets and any­one who pre­tends they do is best avoided.

Firstly, ask them to out­line ex­actly what ser­vices they of­fer. Then fol­low up with, “what are the weak­nesses in your fi­nan­cial plan­ning ser­vices and what are my best work arounds?” The field of fi­nan­cial plan­ning is way too vast for any­one to be an ex­pert at ev­ery­thing. Even gen­er­al­ist plan­ners who take a holis­tic ap­proach can’t be ev­ery­thing to ev­ery­body. Do they know their lim­i­ta­tions? Steer clear of the plan­ner who im­plies they can do it all.

“What’s your money hang up?” Ev­ery­one, yes even those in the fi­nan­cial in­dus­try, has a money is­sue or two. There are many emo­tions tied to money so there’s no shame in ad­mit­ting this. Good ad­vi­sors know their “thing” and un­der­stand how to deal with it. What you want to avoid is an ad­vi­sor who doesn’t even rec­og­nize their own is­sues nor knows how to deal with them. Rest as­sured those is­sues will show up some­day in the ad­vice they give you. The dan­ger­ous part is that nether you nor they will rec­og­nize when they start pro­ject­ing their is­sues onto your sit­u­a­tion.

Look them in the eye and ask, “are you my fidu­ciary?” A fidu­ciary is legally re­quired to put your in­ter­ests be­fore theirs. While it isn’t a guar­an­tee of good ad­vice, it’s a big road­block for bad ad­vice. It’s easy to an­swer yes to this straight­for­ward ques­tion. Then fol­low with, “what reg­u­la­tory body are you reg­is­tered with and what is their web­site?” All le­gal fidu­cia­ries are reg­is­tered some­where, pub­licly on­line. True ad­vi­sory pro­fes­sion­als take this mat­ter se­ri­ously and know ex­actly where this in­for­ma­tion is and are happy to es­tab­lish their pro­fes­sional cre­den­tials. It isn’t rude to ask. They should be ea­ger to help with your due dili­gence. Any hedg­ing or hes­i­ta­tion or “I’ll get back to you” means their ei­ther fak­ing it or aren’t that se­ri­ous about putting your in­ter­ests first. Fi­nally, ask them for a writ­ten con­tract or agree­ment that you both can sign.

And of course, there’s the fee ques­tion. Use this, “Is the fee I am pay­ing you the only way that you or your firm are mak­ing money from me?” Any kind of hes­i­ta­tion or in­di­rect an­swer, in­di­cates prob­a­bly some­thing hid­den. Pro­fes­sional ad­vi­sors vol­un­teer the fees both they and their firm re­ceive as well as sep­a­rately break­ing out the costs of all fi­nan­cial prod­ucts. Ask them if they are will­ing to doc­u­ment all the fees and sign for it.

Of course, in the end you still want to work with the per­son you like. Hope­fully some of th­ese ques­tions will help you en­sure that per­son is also a pro­fes­sional act­ing in your best in­ter­ests.

The right ques­tions can go a long way to­wards help­ing you sep­a­rate the wheat from the chaff

Join my Ex­pat Fi­nan­cial Plan­ning Wechat group to dis cuss com­mon is­sues and share fi­nan­cial ad­vice. Reach me at Brian@hut­sonas­so­ci­

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