How to Work with a Financial Advisor

In the last issue, we talked about how you might approach the selection of a financial advisor.

We recommended learning everything you can about the prospective advisor’s background, credentials, philosophy, and practical processes. We also talked about the three values that we at MCS Financial Advisors believe are of paramount importance in an advisor: independence, objectivity, and transparency.

IN THIS ISSUE WE BUILD ON THAT THEME and talk about how best to work with a financial advisor once you have selected one. Let’s assume you’ve done your due diligence and have found an advisor you believe you can trust. Now what?
The short answer – and the essence of a successful engagement with your advisor – is this: Communication.

During your selection process, you interviewed prospective advisors and gathered information about them. Now that you have found someone you believe you can trust, it’s time for you to communicate to them.

It is essential that the communication be complete, honest and genuine. Obviously, that level of honesty requires trust – which is why trust is such an important criterion in your selection process. Once you’ve selected someone, it’s time to exercise trust by being accurate and complete with your disclosures.

Remember, your advisor can work only with the information he or she has been given. If you withhold important information – or worse, distort the truth in an effort to protect yourself – you are dooming the advisor and yourself to failure. Success is built on honest communication.

Ideally, you want to forge a collaborative relationship with your advisor. You are both in it together. An advisor’s success in serving you – which is to say, your success in the professional engagement – depends on the advisor’s knowledge and understanding of all the relevant issues in your situation.

What should you expect to tell your advisor?  The average advisor tends to focus almost solely on collecting factual information – data, balance sheets, investments, net worth, business valuations, tax exposure, and some numerical values for your retirement and legacy goals. Numbers can be comfortable and relatively easy to work with. They are also easier for clients to talk about. For those reasons, a lot of financial advisory relationships settle into a strictly “numbers only” focus.

The superior advisor, however, is sensitive to the bigger picture – personal goals, values, dreams, and aspirations. They take into account the reality of family dynamics. Maybe the family is blended and there are complex extended family relationships. Maybe there are addictions or other mental health issues in the family. Maybe there are strong charitable interests or very specific, values-based legacy intentions. And for you, there are the subtle but very personal goals and expectations surrounding your own particular style of living. These are things that the superior advisor will consider primary in a planning or advisory engagement.

It is the human aspect of the advisory relationship that makes the fee-based model so important. Because your advisor is compensated for their service and not for selling something, the advisor is free to make recommendations that might not involve money at all, but rather speak to your deepest and most complete needs.

Find a good advisor. Then open the communication. You will find yourself in far greater control – of the process and of your future – than you could ever imagine.