Though there are many questions you should ask when selecting someone to entrust with helping you handle your money, carefully consider these three when getting started:
#1 Who is the subject of the first meeting
Many advisors may want to wow you with the credentials, their background, or possibly even their investment track record. They’ll tell you all about themselves and focus on the investments that they do for their clients. They’ll tell you way their fund is better than the others and they’ll talk about how they knew just when then market was about to crash. They’ll also give their opinion on the global economic situation, politics, trends in technology, and what’s going to come out of the current world crisis.
Are these guys smart?
Maybe. But should you hire them to be your investment advisor? No way.
By the time you’ve been invited into a meeting with an investment advisor, you should have confirmed that he’s licensed to work with you on the types of investments you need. For that, you can just check the web. Once you’re in the meeting, the advisor should spend much more time asking you questions than lecturing about who he is. Since no investment advisor can predict the future, the service you really need from an advisor is for him to give you advice based on your situation.
He should start by asking you about your family situation, your financial situation, and your goals. Then he should dig more deeply to find potential trouble spots, missed details, and possible tax issues that would require a tax review. If you want a free questionnaire that you can use to help you put together all the information that you should have ready for that first meeting, you can use an online tool that I developed when writing my most recent book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investments. Go to www.RichAsAKing.com/snapshot.
#2 Is the advisor telling me what to do or educating me?
Though you may sometimes want an advisor to tell you what to do, what’s more important is for him to educate you about your choices so that you can control your financial destiny. If you’re not interested in learning about stocks, bonds, and mutual funds, that’s fine. Your advisor should guide you along the path of making selections. But he should do it with the heart of a teacher, showing you why he’s advising certain ideas and how those programs will help you reach your goals. If he’s just pushing some idea on you and not giving you the time necessary to explain the logic, find someone else.
#3 Does he have expertise in areas that are important to me?
Having been in the investment world for over 20 years, I can tell you: It’s complicated! Even experienced, licensed financial planners / investment advisors cannot know everything about all investments in the world. When you meet someone who handles Israeli investments, don’t ask him to also be an expert on your U.S. portfolio. Don’t have an insurance agent manage your stocks and bonds. And don’t assume that the bank’s investment advisor can handle all your worldwide investments.
I work with people who have U.S. brokerage accounts or IRA accounts. My clients tend to like working with someone in English, have U.S. stocks, bonds, and mutual funds, and just want to maintain their U.S. accounts while living in Israel. I don’t file taxes for my clients, though I’ll work with their accountants to set up intelligent plans; I don’t manage my clients’ Bituach Minahalim or Keren Hishtalmut programs, though I do include that information when putting together financial plans; and I don’t write trusts and will for people, though I work with those documents all the time when dealing with intergenerational wealth transfer.
The simplest way to find out if the advisor can help you with your specific situation is to tell him what’s going on and then asking him how he would handle it… which brings us back to Point #1 of this article: Make sure that the advisor spends a lot of time getting to know who you are.
If you have investments in U.S. bank accounts, brokerage accounts, IRAs, and pension plans, then there’s a good chance that Profile Investments can help you and your investment portfolio.
Douglas Goldstein, CFP®, investment advisor, is the co-author with Grandmaster Susan Polgar of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing.
Douglas Goldstein, CFP®, investment advisor is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published August 10, 2015.