Your financial adviser is important.
No one else has such influence over your money, and when you ask for their advice, you assume it comes with significant professional expertise.
That might be years of experience in the field, or certifications like CPA or CFP, or a thick sheath of existing client recommendations. Maybe, it’s all three.
But there’s one important factor you probably won’t see on your adviser’s — or potential adviser’s — résumé: humility.
Humility “in large doses” can signal someone you want to work with, James Osborne of Bason Asset Management in Lakewood, Colorado told the Wall Street Journal’s Jason Zweig. Humility can indicate your adviser isn’t going to take unnecessary risks with your money in pursuit of a lofty but ill-advised goal such as trying to beat the market.
That’s why, he says, an in-person conversation is so important.
“Financial adviser” itself is a broad term that can include financial professionals working as stockbrokers, insurance agents, tax preparers, investment managers, and financial planners. It doesn’t imply fiduciary responsibility, which is the guarantee your adviser is working in your best interests. Usually, however, “financial adviser” is used to mean investment advisers, whose expertise lies solely in managing investments, CFP Bob Gavlak previously told Business Insider.
Along with lack of hubris, there are a handful of questions you can ask to see if your financial adviser is working in your best interest. The Department of Labour has a list has a list, including:
- Do you consider yourself a fiduciary?
- How are you compensated?
- Are you a licensed or registered investment adviser?
CFP Sophia Bera writes on Business Insider that, if you’re early in your career and still establishing financial security, you may not even need professional advice. Once you’ve amassed sufficient emergency savings, eliminated credit card debt, and set up retirement contributions, then you might want to enlist help to deal with questions around life insurance, taxes, or buying a home.
Then, you might want to keep in mind the five signs of a terrible financial adviser.