5 Simple Rules for Advisor Meetings

Wade N. Murphy |

Let me begin by saying that you can put together your own retirement plan.

Those of us in the financial advisory industry will not be offended. I wish educators would take more of an interest in their financial lives. We also know the world of investing is not for everyone.

So-you have arrived at the decision that you want to work with a financial adviser.

Depending on your school district and how far along you are in your career, you may already have had contact with an insurance agent or financial adviser. Maybe you received a referral from a coworker or were mailed some marketing material. Now it is time to take that initial contact and turn it in to a productive working relationship. But how do you know what a good adviser looks like?

Here are 5 rules for what to do when you finally sit down with a financial advisor representative.

Rule #1 when meeting a retirement planner:

Do not sign up at your first meeting!!

This should be a given, but as stated earlier, most people sign up for their retirement in a hurry. I understand that once you have reached the decision to part with some of your income, the inclination is to get it over with as soon as possible. The whole process can feel bothersome. But please take your time here. If your first meeting with an adviser doesn’t feel right, meet with another adviser before deciding. You have options here. Take the time to explore them.

With this in mind, Rule #2:

Ask for more than one option. Even if your advisor lays out a investment for you that sounds great, ask for another option. A huge part of your process is educating yourself as to what investment products are available to you. You would never let your waiter tell you what to have for dinner without first seeing the menu. Ask to see as many options as possible, asking the pros and cons of each. There is a suitable program out there for you. This does not mean the plans your advisor has are bad plans. Just like the car that a car salesman might suggest for you is not a bad car. You are not looking for just an alright car; you are looking for the right car for you.

Rule #3:

In the world of investing, it is important to understand how your broker or representative makes his living. In retirement planning, your rep gets paid a percentage of your money. Which technically means that you are paying him and that he works for you, so do not be the slightest bit hesitant to ask your representative. “How do you get paid?” When you buy any product at a store or online, once an item is purchased, how your purchasing money gets divided up on the sellers side of the equation is not any of your concern and occurs well outside of your vision. Investment planning should be different. You understand your adviser is going to get paid, all you want to know is when. How much, and how will that affect your investments over time. Although hardly scientific, pay close attention to how your adviser answers these questions. If they hem or haw or stumble while responding, their lack of a satisfactory answer could be a red flag. You want no confusion in this area with your hired adviser.

Rule # 4:

Make sure your adviser is fully licensed. There are a variety of investment products you will want within a fully diversified retirement account. Having life insurance and a strong portfolio of securities are totally different types of investment vehicles; the licenses required to sell these products are different. Make sure your agent is fully licensed and authorized to sell you all the different investments available to you. If the only license your adviser has is an insurance license, what are the chances that they will recommend something other than an insurance based product?

Rule # 5:

Do your due diligence. Between your first and second encounter with your prospective rep, do not hesitate to do a background check on him or her. The Financial Industry Regulatory Authority (FINRA) has a website: https://brokercheck.finra.org - I strongly suggest you do a background check on your prospective adviser to ensure he does not have any industry complaints or sanctions against him of which you should be aware. This is common sense. Good retirement planning is about investing in your peace of mind. Our advice is to not cut corners here.

Here’s a bonus tip: Using email for your investment questions is a great idea! That way you’ll get an email response...in writing... that you can refer back to if there is ever a question of what was said or promised.

Did you know that if your advisor has a securities license that his or her emails could be subject for review? Most broker dealers have sophisticated systems that will search their advisor’s email correspondence for potential issues and flag them for review. How would you respond to questions if you knew someone could be potentially looking over your shoulder?

These rules are not designed to scare you. We are not trying to disqualify your retirement planner. This was your idea, you initiated the first encounter, and you want retirement.

It has been our experience that those who sign up at the first meeting are being enrolled and are not entering in to a long term mutually beneficial healthy investment relationship with their representative. I want you to feel like a client and not a customer.

Let me clarify. There are risks for both parties in applying these 5 rules. As a customer, you may get distracted or lose your edge and the moment could pass. As a broker, watching a potential client walk out the door who has not signed up is always risky. Will they come back? Not all do.

Here is another secret. The good advisers will let you go.

A good adviser will want to know the details of your life so he can help you plan accordingly. He will want to know as much about you as possible to provide you with suitable options to consider. He sees retirement for what it is. A thirty year vacation in which you can do whatever you want.

Whether you want to travel the world or open up a local coffee shop, a good adviser will know all this about you and help you plan accordingly. And that will all happen for you if you follow these simple rules.

Patience! I know that this whole process can be intimidating! Don’t be in a hurry...but also don’t procrastinate! Take some time, meet with a few different planners. Get a second opinion. Then take action!