4 Secrets of an Effective Financial Advisor

Too often, clients find themselves struggling to trust their financial advisor the same way they struggle to trust their car mechanic. “Sure, these professionals have the technical knowledge to perform their trade, but are they using it to serve me [the client] or themselves?” This point is no slight to the services of wealth management and auto repair. It simply comes with the territory of paying someone to tell you what you don’t know. You’re being asked to trust they won’t put their interests above yours. Of course, this is why reputation is such an important thing in both businesses.

Fortunately, we do not need to blindly trust we are being served well, especially in financial services. There are indicators. There are questions you can ask, things you can do to answer the question “Is my advisor serving me well?”

Full disclosure, the authors of this article are a team of financial advisors at Compass Ion Advisors, a wealth management firm in the suburbs of Philadelphia, PA. The reason we decided to offer these “secrets” is for the simple reason that we regularly encounter individuals and families who either have not been served well or have trouble knowing if they are being served well. This topic is one of the many that constitutes our expertise, and not enough advisors have spoken up about it.

So let’s be candid, what should you expect of your financial advisor, especially right now?

#1. Financial plans are key and when they aren’t advisors overemphasize investments.

Fiduciary responsibility is the legal responsibility to act in the best interest of the client. Registered financial advisors are all bound by it, and it is what sets them apart from so many other forms of investment advice and products out there. It helps to avoid obvious conflicts of interest, but there is more to the story here if you know the right questions to ask.

#2. Communication should be proactive

from your advisor on a frequency, you help establish and they maintain.

#3 The fees you pay ought to be clearly understood and reviewed by you and the advisor on an annual basis

to ensure expectations are being met for both parties. If your advisor dislikes the conversation, it is a bit of a tell that there may be something amiss in your relationship.

#4 Communication ought to be concise and to the point regarding the performance of your investments.

Your portfolio returns should always include “net of fee” figures and clear expressions of the ongoing risk taken to achieve those returns. The use of appropriate benchmarks to evaluate your returns should also be in play. As the client, it does not help you if your returns are compared to bonds when your risk is that of global equities. A basic understanding of comparative risk/reward should be a regular part of any conversation. Over time you ought to feel increasingly informed in this area because it is often the area where we see families and individuals taken advantage of the most.

Wondering if you are with the right advisor? Have more questions? Schedule a call with us.
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“This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable. This presentation may not be construed as investment advice and does not give investment recommendations.

Additional information, including advisory fees and expenses, is provided on Compass Ion’s Form ADV Part 2, available upon request or at the SEC’s public disclosure site, https://adviserinfo.sec.gov/firm/summary/166418. As with any investment strategy, there is potential for profit as well as the possibility of loss. Past performance is not a guarantee of future results.