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I’ve written from time to time about the qualities to look for before you engage a financial planner, such as experience, professional qualifications, and having a fiduciary responsibility to clients. One other factor is often important, as well: whether a planner is a “heart” as well as a “head” advisor.
You aren’t necessarily going to identify an advisor’s “heart” qualifications with checklists or by asking direct questions. It’s often more effective to observe advisors’ behavior and listen to what they say in initial interviews. Here are a few ways to learn answers to important questions you may not know how to ask:
1. Are you authentic? Do you live what you teach?
Even in pre-engagement interviews, planners may expect you to disclose substantial personal and financial information: your approximate net worth, significant life events like divorces or serious illness, and career or life goals. Notice whether planners seem comfortable sharing appropriately about their own related experiences.
It’s also helpful at this point to ask two direct questions. One: Is your own portfolio invested in the same funds and with the same philosophy as those of your clients? Two: are you a client of another financial planner?
2. Will you listen to me with attention and respect?
Do advisors talk more than they listen? Do they interrupt? Do they brush aside concerns that you raise or fail to answer your questions? For couples, do they fail to interact with both of you? All of these are red flags.
In addition, you might ask for brief examples of how the advisors help clients navigate difficult situations. Here’s the kind of response that would be a positive sign: “When the markets drop and a client becomes fearful and wants to go to cash, here is what my response would be. First I would assure them they could absolutely get out of the market if they choose. I would give them time to talk about their fear. Then I would ask questions about how would it feel if they did go to cash, how would they know when to get back into the market, and what would they do with the cash. Essentially, I would support them in talking through their fears rather than simply telling them what they should do.”
3. Can I trust that you won’t judge and criticize me for my financial mistakes?
A useful piece of advice I received years ago was, “Don’t tell people about your successes and how great you are. Tell them about your warts. Nobody can relate to someone who is perfect.”
It may seem counter-intuitive to trust financial advisors who talk about their own financial screw-ups. Yet someone who can admit to mistakes and learn from them often demonstrates more genuine confidence and maturity than someone who tries to impress you with successes. If advisors seem willing to share their “warts,” they are unlikely to shame or judge you for asking questions or disclosing your own misjudgments.
4. Does what you do really make a difference for clients?
Ideally, a planner’s passion for and commitment to the profession is about people as much as numbers and investment returns. If advisors share client success stories, notice whether they appropriately guard clients’ privacy, focus on relationships and life transformation, and appear to regard clients with respect and appreciation.
Essentially, when you interview a prospective financial planner, what you want to know is: “Can I trust you? Not only with my money, but also with my fears, my life challenges, and my dreams.” Even though you don’t put that question into words, you can and should expect planners to answer it.