For reasons likely to remain obscure, October 30 was Checklist Day. But while the origins of this observance may be a mystery, the value of checklists is clear: They help us organize our time and break large jobs into manageable steps. You can use a checklist for just about any significant endeavor – including the task of choosing a financial professional to help you achieve your important goals.
Here’s what such a checklist might look like:
Find someone with the proper credentials. Make sure a prospective financial professional has the appropriate securities registrations.
Find someone who has worked with people like you. You’ll want to seek out a financial professional who has experience working with people in circumstances similar to yours – that is, people of your financial status and with essentially the same goals and attitudes toward investing.
Find someone who will communicate with you regularly. During the course of your relationship with a financial professional, you will have many questions: Are my investments performing as they should? Should I change my investment mix? Am I still on track to meet my long-term goals? Plus, you will have changes in your life – new children, new jobs, new activities – that will affect your financial picture and that need to be communicated to your financial professional. Consequently, you need to be sure that whomever you work with is easy to reach and will be in regular contact with you. Many financial professionals meet with their clients at least once a year to discuss the clients’ portfolios and recommend changes, as needed, and also make themselves available, through phone calls and email, for any questions or concerns their clients may have.
Find someone who will honor your preferences. Some financial professionals follow certain philosophies. For example, you might find one advisor who tends to favor aggressive investing, while another one might be more conservative. There’s nothing wrong with either approach, but you’ll want to be sure that your preferences take precedence in all recommendations and guidance you receive from a financial professional. And many professionals won’t express any of their own preferences at all, but will instead follow a course of action based on your goals, risk tolerance and time horizon.
Find someone connected to other professionals. Your investment plans don’t exist in a vacuum. Over time, you will likely need to integrate elements of your investment strategy with your tax and estate planning strategies. When this happens, you may find it advantageous to have a financial professional who can work with tax and legal professionals to help you meet all your needs in these areas.
Find someone whose compensation structure is acceptable to you. Financial professionals get paid in different ways – through fees, commissions or a combination of both. Which method is best for you, as an investor? There’s no one “right” answer – but you will certainly want to understand exactly how your financial professional will get paid and how this pay structure will affect your interactions with him or her.
You may find this checklist to be useful when you interview financial professionals. Take your time and make sure you’re confident about your ultimate choice. After all, you’re hiring someone to help you reach your key goals, such as a comfortable retirement, so you’ll want to get the right person on your side.