What to Look For in a Financial Advisor

11/29/2011 3:00 pm EST

Focus: ESTATE PLANNING

Evelyn Jacks

Founder and President, The Knowledge Bureau

There’s little point to forcing a relationship with an advisor you don’t get along with, says Evelyn Jacks, who explains simple goals to follow to help you choose the right planner in this exclusive interview with MoneyShow.com.

Evelyn, today a lot of people have lost a lot of confidence in their financial advisors, so you think they need to take another look and perhaps find a way to trust.

Yes, and trust is the big issue today. It’s sad because people feel like they’ve been let down by their financial advisor, and they don’t know where to turn.

I think that what needs to happen is that people need to reevaluate the role of advisors in their lives. We will do better as a team, we’ll do better together, and whether that’s your investment advisor, your tax advisor, your legal advisor, your insurance advisor, together as a team we can build wealth faster.

We do have to monitor the role of those advisors. Possibly it’s not that they’re going to get you a higher return on your investment, although the fact that they are studying it 100% of the time and they’re in it and they’re watching it and they have the connections that they do to the information, certainly is of advantage to most of us…and that’s what we’re paying for.

But I think people really need to rethink their roles with their advisors, because it really is a joint decision-making role. Again, if you have a good process in place—in fact, if you know what your goals are in the short-term and in the long-term, and you can discuss those goals with your advisors—then you’re at the table with them making those decisions.

The role of the advisor is really to keep you from making exactly the wrong decision at the wrong time. Most people do that when they get nervous, and so what we want is we want our advisors to hold our hands through those really difficult times and help us re-jig our portfolio so that risk management, at those difficult times, stays on track. That’s really the role of your advisor.

How do we select an advisor that’s right for each individual?

This is a critical question, because you need to make sure the advisor gets you. I want to know that my advisor gets me.

You know I have a different reality in my life than you do, and that reality comes from history, it comes from a positive or a negative take on financial literacy, It’s really quite remarkable how few people are financially literate, and how much help they just need with the definitions and understanding the markets.

So you’re looking for a financial advisor who is an educator, an advocate for you, and a steward. They’re in it with you, they are helping you build and grow your wealth, but they are helping you steward it to the next generation.

Statistics tell us that even though we like to do it ourselves, we want our children to have help from trusted advisors: 60% of people would like to see their children have a relationship with a trusted advisor. So even if we’re not doing it for ourselves, we need to do it for our kids.

Very briefly, how do we go about seeking out a positive financial advisor that we’ll get this good relationship with?

I’d like to start with my top three questions. What are the top three things on your mind that you’re going to use as an investigative reporter?

You’re going to go and interview advisors, you’re going to look at people in different size of firms, you’re going to ask for referrals, and you’re going to ask them your top three questions, things that you want to know.

If those people come across to you as advisors, educators, advocates, and stewards, you’re probably in front of the right person.

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