Dealing with Financial Advisors

If you want to do plan your financial life well, you can’t just start investing on your own without taking a step back and looking at the big picture. You need to hire the right professional to guide you.

Don’t think that you can just pick up a book and do all of your financial planning yourself. Without the help of a seasoned professional, you can’t make a complete financial plan.

When H. Robert Bradley and his partners founded NorthLanding Financial Partners, an independent registered investment advisory firm in Rochester, N.Y., they chose the name of the firm very carefully. The last thing they wanted to do was to call their firm a “wealth manager.”

How can you be sure that your financial advisor is on the up and up? Your assets are too important for you to blindly trust the person you hire to tend them.

Over the course of your investing life, you will probably hear a large number of misstatements, partial truths, and out-and-out whoppers about investing. These ideas are typically part of a well-rehearsed sales pitch, often by someone who has a financial interest in getting investors to believe them.

They sound very seductive. Some ideas are bandied about so widely that they become folk wisdom.

When you first meet with a financial advisor, it’s important to ask not only how much his or her fees are, but who actually pays. An advisor’s compensation method can affect the type of advice you get, so you should understand the differences before you choose who to hire.

There are three basic ways financial advisors and planners are compensated: Commissions, fees and a combination of both. Neither is absolutely more or less expensive for you.

Here is what makes them different and relevant to you as an investor.

The financial services industry is unquestionably male dominated, and often stereotypes women as innocent wanderers. This is a mistake, and it’s one that all advisors and investors should realize.

Just last year, an old friend and new client told me that her prior advisors always “talked down to her” and “made me feel like an outsider.”  She said, “They always ignored me when I was with my husband, and treated me like an infant when I was alone.”

Blair Hodgson DuQuesnay disproves a well-circulated myth: that financial planning is the exclusive province of gray-headed advisors who cater to middle-aged and elderly clients with fat wallets.

The 31-year-old advisor just founded her own independent registered investment advisor business that caters to young professionals in New Orleans. She believes that advisors neglect to harness the power of the Web and ignore younger investors at their own peril. Clients in Generation X and Y are tomorrow’s well-heeled set.

Finding a good advisor is only half of a fruitful advisor-client relationship. Being a good client can help you increase your wealth because some advisors do just a little bit more for great clients who are easy to work with.

Here are a few guidelines for doing your part to build a good relationship with your advisor.

Being a good client is just as important as finding a capable advisor. One of the key traits of a good client is willingness to stick to a portfolio for the long-term and trust the advisor’s recommendations.

While finding an educated, experienced and ethical advisor is very important, it’s only half the story. Of course, a good advisor can positively influence a client’s behavior, but the client ultimately makes the decisions that lead to success.