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An insider’s guide to choosing a financial adviser
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The Globe and Mail-ROB CARRICK
Can clients be at fault if they’re not happy with their investment adviser?
Veteran adviser Betty Tomsett says people aren’t putting enough effort into the search for an adviser, and this is leading to disappointing relationships.
“The client needs to step up,” said Ms. Tomsett, director of wealth management at Richardson GMP Ltd., and an investment adviser since 1986. “This generation has been spoiled – we’ve had people doing things for us all our lives. We’re happy to delegate but we’re not willing to step up and be proactive where we need to.”
What follows is Ms. Tomsett’s insider guide for people who want a methodical approach to interviewing a prospective adviser. “These questions are about as probing as you can get without the adviser kicking you out the door,” she said.
Find prospects to interview
It’s often said that the best way to find a good adviser is to ask friends, family and business contacts to refer someone they use and like. Ms. Tomsett refines this advice a little. “Go not to your best friends, but to people who have done well financially, who you admire and who are in the same financial bracket as you. You don’t want to end up with an adviser who only deals with high-net-worth clients.”
Set the interview dynamics
Two key points to start – the meeting must be face to face, and you should meet with the adviser and not his or her associates or assistants. High-powered advisers may have marketing assistants or a business development person. That’s fine, but you’re hiring the adviser, not the support staff.
The interview is as much about watching as listening, Ms. Tomsett said. “When you have a face-to-face meeting, you get to look at a smirk on the face, whether they roll their eyes, whether they’re watching the clock. You’re looking to see if the adviser is answering everything straight on, if there’s no rush and the body language is open and professional.”
Come prepared by bringing your financial statements. “The meeting might go quite well – you don’t want to be prevented from asking specific questions because you don’t have your personal details.”
A question to get out of the way early is how large the adviser’s client base is. The total dollar value and number of accounts are less relevant than the number of households the adviser is working with, Ms. Tomsett said. Watch out for advisers with hundreds of households – they may have trouble finding time to discuss volatile markets like we’re seeing now with each of their clients.
If the adviser you’re talking to uses a team approach, get the background on the team members and find out who’ll you’ll be speaking to when you call in with questions.
Suss out the qualifications
Start with the basics: How long have you been a licensed adviser, what professional designations have you earned, and what do those designations mean? Not surprisingly, Ms. Tomsett favours the adviser with enough experience to have seen a few up-and-down market cycles.
For a more thorough look at your adviser’s experience, ask to see his or her résumé. Look for relevant work experience as, say, an accountant or business owner. “This information helps you put their whole professional acumen into context,” Ms. Tomsett said. “You want them to be street smart.”
By all means ask for references, but recognize that an adviser is only going to give out names of people who he or she is comfortable with and have done well. Why bother with references, then?
“What you’re doing is sending a message to the adviser – I’m not afraid of you, you’re accountable to me and I will decide. It’s more a matter of the profile of yourself that you’re presenting to your adviser. You’re saying, I’m not a pushover here.”
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