Shawn Anderson: 5:11. Now, let's talk about hiring the right financial advisor - big decision there. It's always a good idea to come prepared with a list of questions you plan to ask him or her, but what the advisor asks you may be even more important.
Hillary Howard: Well, let's find out why with Dawn Doebler, co-founder of Her Wealth and Senior Wealth Advisor at The Colony Group in Bethesda. Hello Dawn!
Dawn Doebler: Hi Hillary.
Hillary: So, what can you really learn by the questions a financial advisor asks you?
Dawn: Well financial advisors do differ greatly in the services that they provide and oftentimes people will interview potential advisors by asking a lot of questions that they prepare in advance. And it's certainly a way to learn about advisors, but I want to suggest another way, is to ask and notice the questions that the advisor asks you. You often can learn about their intentions and the approach that they take by what information they gather from you the first time that they meet with you. And you know Thomas Watson, the CEO of IBM once said, “the ability to ask the right question is more than half the battle of finding the right answer”. And I really think that applies here.
Shawn: Well, what are few of the initial questions that you think an advisor should be asking?
Dawn: Well, Shawn people's history with money and their family attitudes tend to have a greater impact on the decisions that people make than what they realize. So, I'd like to learn more about the money experiences that may be operating in the background. And I ask the question, “How have you managed your money in the past?” This gives me some clues on what's worked and what hasn't worked so well. And certainly when I'm speaking with couples, this question helps me to see if there are mismatches in the way they see things because that's common and actually can be that the heart of financial problems. I also ask people questions about their family and their heritage; family matters can be difficult to reveal but it's very important that your advisor knows about those things and you want to feel comfortable talking about sensitive topic.
And also both of these questions give me clues about potential answers to my third question which is, are there any investments you want to avoid? Your family values may translate into opinions about what companies you're willing to invest in and socially conscious investing is increasingly available because of this, investors really are wanting to align their investment dollars with their personal beliefs. So, some examples are requests to avoid things like sin stocks, such as alcohol, tobacco or gambling stocks.
Hillary: So, what do you ask people about their tax returns, what do you want to know?
Dawn: Well Hillary, I know you've heard me say before, “Your federal tax return is the single best document to understand your total financial picture”. So your financial advisor should review your tax return and ask questions to gather the details of your wealth. That data informs advice about what investments are appropriate, potential taxes if you reposition and whether you have any tax loss carry forwards. So, look for advisors questions about future events that could significantly impact your tax or your financial life situation. And so the bottom line really is, your advisor should take the time to learn the details of your life, look and notice the questions that they ask; those should be good questions before they recommend a solution for your family.
Consider this your training manual to get and stay financially fit for life!