Working with a reputable financial advisor may be one of the most important decisions that any executive or business owner can make.
When it comes to the financial services industry, trust has always been an issue. Consumers have been taken advantage of in numerous instances. One specific instance that is near to us has to do with a phony advisor that orchestrated a ponzi scheme targeting the Haitian community in Florida.
Stories like this are sad to see, and that is why we feel compelled to highlight the importance of working with a reputable financial advisor.
Learn the most critical questions to ask a financial advisor
Appreciate the value that a financial advisor can bring to executives & business owners
Understand why working with a reputable financial advisor may be the most important decision for your retirement success
Questions To Ask A Reputable Financial Advisor
For the Haitian community in South Florida seeking sound financial advice, we strongly suggest that you take your time when vetting a financial professional. By asking the right questions, you can quickly spot red flags and hopefully find a trusted advisor to work with.
Whether you are reviewing an advisor's website, having an introductory phone call, or meeting in-person, come prepared with a lot of questions. There is no rush to make a decision and you never want to regret such an important decision. Finding the right advisor for you will have long-term impacts for your retirement, family, and wealth. Do not take it lightly!
While this list is not all-encompassing, it is a great start:
What is your background, experience, and education?
When it comes to financial advice, you really want someone that is competent and highly knowledgeable. Because the industry is rapidly changing and legislation (that impacts retirement) is top-of-mind, you need someone that has your back.
When trusting someone with your nest egg for retirement, you will sleep better at night if that individual has been through tough times during different market cycles. In addition, if they have a long time period of experience helping households achieve retirement success, you can have confidence in their service to you moving forward.
Education is also very important in finding a reputable financial advisor. Undergraduate degrees and securities licenses are table stakes these days. You really want to look for someone that has a specialized designation within portfolio management, financial planning, or tax. Working with someone that has a CFP®, CFA®, or CPA designation is a great start.
In addition, when working with a competent financial advisor, you want to find one that is growing their expertise through continuing education. Because tax, estate, and retirement legislation changes quite frequently, you need someone that is staying abreast to these areas that will impact your long-term financial plan.
For the Haitian community in South Florida, you may want to work with an advisor that comes from your community. Oftentimes their is a lack of cultural understanding that some advisors miss when working with clients. By finding a financial advisor with a similar background, there will be a deeper understanding of your overall values.
Are you a fiduciary?
A fiduciary financial advisor is someone that puts their clients' best interest above their own. This is a very important question to ask your potential financial advisor.
When working with a fiduciary, you are getting advice that is 100% in your best interest. This type of engagement eliminates potential conflicts of interests.
Another way to better understand if your advisor is a fiduciary is to ask them how their firm is structured. For example, do they work for a bank, broker-dealer, or insurance company? Or do they work for a Registered Investment Advisor (RIA)? When a financial advisor works within the business model of a RIA, they are likely to be a fiduciary. In contrast, if the advisor works for a bank, broker-dealer, or insurance company, they cannot be a fiduciary.
One last point to the fiduciary discussion is to ask how the advisor gets paid and if they have any conflicts of interest. They are likely a fiduciary if the only way that they get paid is from their clients. Similarly, if they have no conflicts of interest, they are considered to be a fiduciary. On the flip-side, if an advisor gets paid via commissions from selling products or from kick-backs by referring you to outside providers, this is not going to be in your best interest.
What is the total cost that I will pay as a client?
This is an important question and we alluded to it above. However, point-blank, you (as the client) want to know exactly what you are paying and how you are paying. Is it an assets-under-management (AUM) fee or commission? Is it project-based, retainer, or hourly-fee?
You may hear arguments for the pros and cons of different types of compensation. However, no matter which fee structure, you need to know how much you are paying. Sometimes it is hard to discern the exact fees that you are paying to your advisor. Transparency is critical to build trust. Make sure that you understand this before working with any financial professional.
What is your process for working with clients?
When working with a reputable financial advisor, the value that you will receive will be more than what you pay in fees. Therefore, before paying any professional, you want to understand what you will get out of it.
By asking a potential financial advisor about their process, you will start to understand all that they will be doing for you. If they don't have a process at all, you will quickly see the red flag.
In addition, if the advisor shares that all they do is select investments for your portfolio and you will not meet with them for 2-years, you may not be happy with such a client engagement.
A reputable financial advisor provides value in the way of having a full process for their clients. This should be explained in how they onboard their clients, to what you can expect in the first year of working with them, and beyond that time period. Understanding what types of proactive portfolio, financial planning, and tax services that they will provide you is critical.
The Value & Benefits Of Working With A Reputable Financial Advisor
For individuals and families seeking to grow and preserve their wealth, working with a reputable financial advisor can certainly help achieve such goals. However, not everyone understands the value and benefits that they will receive.
Here are some of the most important benefits of working with a reputable financial advisor:
Provides tailored, comprehensive advice centered around your specific goals
When it comes to financial advice, most people only think about investing. However, a reputable financial advisor will make sure to have a comprehensive financial plan for you.
This goes beyond just the portfolio. That is one piece of the puzzle, but what about taxes, estate planning, risk management, etc. Your financial life is made up of many different topics, and it would be detrimental to your long-term success if not every area was covered.
In addition to helping you construct your portfolio, it would be important to plan for the impact of inflation or excessive healthcare costs during retirement. If your financial plan does not cover these nuanced topics, other topics may also be overlooked.
Furthermore, there must be an emphasis on your unique values, goals, family, culture, and circumstances. A reputable financial advisor will make sure to ask the deep questions and understand your financial life picture. By doing this, they will be able to cater their expertise towards helping you achieve your dreams in retirement.
Acts as a behavioral coach when emotions need to be in check
Investing is very emotional. No matter how experienced you are, emotions get the best of you.
When working with a reputable financial advisor, they will act as a coach and provide emotional guardrails during volatile times. The best of the best will do this in a way that gives you peace of mind and helps you sleep at night.
Oftentimes, sticking to the course is the best plan of action. Working with a financial advisor that can help talk you off the ledge and keep you on track is worth every penny.
As an example, if you think back to the COVID-19 pandemic, emotions were at all levels throughout 2020. As an investor, it was not an easy market to just sit back and watch your portfolio fall. However, if you went to cash in March or April, when would you have gotten back into the market? Because nobody has a crystal ball it would have been impossible to predict when the market was going to course correct. In fact, many professional investors and institutions had no idea the market was going to correct in such a fast blip.
That example goes to show that investing is tough and emotional. A reputable financial advisor's job is to provide the emotional guardrails during times like COVID-19 volatility. In addition, they will be there to coach you through those times.
Decreases stress and gives a peace of mind
Sometimes it makes sense to delegate and work with a professional. By entrusting your retirement with a competent and reputable financial advisor, you will feel a sense of ease.
The decreased stress and peace of mind does not happen overnight. However, once you start seeing the value and truly understand the benefits, you will start to feel empowered to focus on the things that really matter to you. You will have more time in your days, weeks, and months. Most importantly, you can focus more time on those things that you value most.
There is so much that involves deep knowledge and continuous learning when it comes to retirement planning. By not having to master those details, you will be able to more fully enjoy your life.
All of the technical investing, portfolio management, & financial planning chops required to achieve retirement success
As mentioned earlier, there are so many areas that make up one's financial life. When working with a reputable financial advisor, they will be able to help in most of these technical areas that you do not have to worry about:
Investment research, security selection, and portfolio monitoring
Asset allocation, asset location, and diversification
Portfolio rebalancing, tax loss harvesting, and other portfolio/tax optimizations
Proactive retirement planning (inflation, healthcare, social security, medicare, estate taxes, etc.)
Small business planning (retirement plans, buy-sell insurance/disability, tax-savings, etc.)
Other key areas such as insurance/risk management, estate planning, tax preparation/planning, education planning, etc.
A reputable financial advisor will mind the details of all of these areas and whatever applies to your unique situation. It is their job to make sure that you achieve your short-term, medium-term, and long-term goals.
They will help you achieve retirement success as efficiently as possible with their experience and expertise.
One very critical aspect of retirement planning expertise is your withdrawal strategy. During your earning years, most people understand how to save. However, once you get into retirement it is somewhat foreign for most people to figure out the best way to use their nest egg as an income source.
This is where a reputable financial advisor can really help. Part of planning a withdrawal strategy is unique to the client, their resources, their risk tolerance, and their income needs. However, if you asked 100 financial advisors to create a withdrawal strategy for you, you may potentially see 100 different answers.
There is no one-size-fits-all approach and there is always more than one way to skin a cat. However, it is always true that there are better ways than most. When you retire, it is very important that you get it right. After you are done working, there is more at risk. Therefore, you must make sure that you allow your nest egg to be well-taken care of.
Why Working With A Reputable Financial Advisor May Be The Most Important Decision For Your Retirement Success
As shared at the beginning of this article, it is not uncommon for consumers to be taken advantage of. Those individuals that invested with that phony advisor lost real money. It may have not been their entire nest egg, but it certainly will have an impact on them.
That is precisely why it is so important that you work with a truly reputable financial advisor. All of the details noted in this article will help you find one. Please use them, as your retirement success depends on it.
Our goal is not to scare you into never working with a financial advisor. Quite the contrary, as we strongly believe that the value that you will receive is much greater than what you will pay. That is 100% the case if you work with a reputable financial advisor.
The value and the benefits that you will receive are unparalleled when you consider what is at stake. The paths towards retirement and during retirement take a lot of expertise, planning, and stress-testing. Going at it alone is not worth it. Most importantly, realizing that your advisor never had your best interest is life-damaging.
For most clients that we work with, it is never about just themselves. Because they are executives or small business owners within the Haitian South Florida community, they often have goals that are bigger than life. They want to provide for their family, loved ones, and greatly community. They want to make sure that they are taken care of.
This is very important when you think about legacy and estate planning. By working with a reputable financial advisor that has your best interest at heart and truly understands your family/community, you can rest assured that they will guide you in the event that you are no longer alive.
Your death must be planned for even if nobody wants to do it. By already knowing your spouse or children trusts your financial advisor, this relationship starts to transcend retirement.
Retirement planning and investing is complex. Working with a professional can make things simple. However, your goal should always be to work with a competent and reputable financial advisor.
If you are part of the Haitian community in South Florida that was impacted by the story noted earlier, do not be discouraged. Please take some of the tips in this article and take the steps to become empowered again.
Our firm is here to help and will do everything that we can to build your trust, make you feel comfortable, and help you achieve your financial goals.