Selecting a Financial Advisor: Advanced Due Diligence

Financial Planning

Choosing a financial advisor to help you manage your money and meet long-term financial objectives is one of the most important hiring decisions you’ll ever make. Think of your advisor as your “financial coach” – taking a lead role in coordinating the advice from multiple specialists and then implementing a plan so it is all working together. Consider asking these questions:

Choosing Research

How much research do you have access to?
How do you decide what to review and rely on?
Is it all from internal sources?
Is it difficult to manage your book and stay on top of all the critical research?

Model Selection

Do you utilize some sort of asset allocation model?
Is there more than one promoted within your firm?
If so, how do you decide which to follow?

Product Conflicts

Does your firm manage proprietary funds or strategies?
Do you ever feel pressured into selling or promoting the internal product?
Do you ever feel the firm uses compensation as an incentice to drive your behavior?

Clients vs. Research

How do you spend your day?
What percentage of your time are you focused on the markets, research and making investment decisions?
What percentage of your time do you spend on clients?
Which do you prefer?

Fund Due Diligence

What is your view on passive vs. active management?
Do you incorporate ETFs into the investment strategy?
How many funds and money managers are on your platform?
How do you narrow the field to the funds you beliveve in?
How do you monitor the underlying funds and what's your sell discipline?
Do you have a lot of third party wholesalers coming to your offices, buying lunches, etc.?
What is your view on that?
Is it just salemanship, or do you really learn something?
How do you find the time to look at all the right funds?

Target Client

How many clients do you cover?
What is the average household size?
Is your firm trying to build scale and shift Financial Advisor focus to higher net worth clients?
How do they incentivize you?
What would your CEO say is the ideal client in terms of liquid assets?

The right questions will tell you if a prospective advisor is right for you.

CRN202510-3187288

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