It can be quite a journey to find the right financial advisor for your specific situation, but the time and energy you devote to the search can pay off in a big way. After all, you’re looking for a partner and advocate to help you plan for some of the most important milestones there are: career shifts, retirement, creating a legacy for the next generation, and more. As you’re looking for a wealth management firm, ask these four critical questions – the answers you receive will go a long way toward helping you choose a long-term partner that’s aligned with your values and priorities.
Are you a fiduciary? To begin with, you’ll want to be crystal clear about whether the firms you are looking at are independent Registered Investment Advisors (RIAs) or follow a broker model.
JNBA is a Registered Investment Advisor, which means we’re held to a fiduciary standard and have a fundamental obligation to provide investment advice that always acts in our clients’ best interests. A recent article in Bankrate.com touched on the importance of understanding whether an advisor is held to a fiduciary standard or only to a “suitability standard.” Advisors held to the fiduciary standard are required to act solely in the client’s best interest. The lower suitability standard only requires them to make sure an investment is “suitable,” but not necessarily in your best interest. And being “independent” means there is no tie to a family of funds or investment products or larger institution. There’s a huge difference there.
How are you compensated? Does the firm and/or advisor make a commission on the recommended investments placed in your portfolio? How much are you paying in commissions and/or fees for the services provided? Make sure to understand potential conflicts of interest and determine if you feel the advisor is always objective. It’s a sad but true fact that some advisors argue against paying off mortgages or other debts in order to keep assets under management.
While we believe in an independent, fee-only model, that doesn’t mean it’s what everyone wants. Really, it all comes down to trust. As long as you understand exactly how your advisor is compensated and you trust that he or she will provide recommendations that meet your goals and objectives, you can have a very healthy and fulfilling advisory relationship. Download checklist.
What is your wealth management philosophy? Aim to partner with a firm whose philosophy matches your own. Take a good, hard look at the things that are most important to you, both when it comes to investing and about your life in general. Understand the advisor’s investment and planning philosophy, and ask yourself if you agree with it. And make sure you’re on the same page regarding expectations.
Do you want a partnership with an advisor who can help you navigate challenges or bumps in the road along the way? Are you looking for a partnership that focuses on developing investment and financial planning strategies to help you meet your overall financial goals and objectives? Or, are you solely looking for someone who is offering money management services? Consider your comfort level with taking risks. Are you content with steady growth over the long haul, or do you prefer to take more risk in an effort to try and beat the market? The philosophy you feel most comfortable with will help you narrow down the type of financial advisor that makes the most sense for you.
What is your client retention rate? While we’ve received numerous accolades over the years, the one our team values the most is our client retention rate. Since we began tracking in 2001, JNBA has maintained a client retention rate of more than 97 percent. We think that speaks volumes about the level of service and advocacy that we provide our clients. It’s not easy to maintain high standards. If it was, everybody would do it. To make sure everybody is focusing on one thing – what is in the best interest of our clients? – takes a strong culture and strong leadership, it takes proven processes and collaboration, and it takes a team with an extremely strong commitment and desire to advocate on their clients’ behalf.
Asking the right questions can help you find a wealth management team that does what they say they’re going to do and help you meet your financial – and your life – goals. If you’d like to ask us questions like these, we’re always happy to share more about our approach and to learn more about your unique situation, plans, and goals. Feel free to contact us to set up a conversation.
Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, Inc.
Please see important disclosure information at www.jnba.com/disclosure