Working with someone who matches your financial personality is key.
Few partnerships may be more important in your life than the one you have with the advisor who helps determine your financial future and plan for retirement. And like any relationship, it’s important to set your standards when finding a compatible partner. Looking for a long-term relationship? Here are five simple steps you can take to make sure you find “the one.”
- You don’t have to go about it alone.
Much as you would with contractors doing work on your home, referrals can make a big difference. Doing online research to verify their credentials or ask friends or relatives for recommendations will help you compile a list of top advisors in your area or who match your preferences.
Want to make it even easier? Take the Positivly Financial Personality Assessment to be connected directly to like minded advisors.
Take Our Financial Personality Assessment
- Ask each advisor what their investment philosophy is.
You will want to make sure each advisor lets you know what they think the best way to invest is. Hearing their approach – which many advisors formalize in an investment policy statement or proposal– will help you find someone whose views on investing align with how you want to proceed. Sometimes, advisors favor one type of products, fixed income or ETFs. That can be a great approach or a crutch. Others may only focus on retirement when you want to focus on growing your small business or saving for your child’s education. Yet others may take a more aggressive or conservative stance than you prefer. Again, you will want to make sure the advisor’s style coincides with how you want your money managed.
- Learn what their fees are.
Compensation for advisors generally falls into two camps: commissions or fees. They either receive commissions on investments or they earn an annual, hourly or flat fee. Some advisors combine the two through fee-based compensation which includes fee plus commissions. Plenty of arguments have been made for and against each option. With the commission model, you’ll have to pay the advisor only when you make trades and avoid the expense when you’re not changing your investments. With the percentage fee model, you compensate the advisor for constantly monitoring your account, and you don’t have to worry that they have any temptation to recommend trades in your account to make money.
A potential red flag: some advisors are paid commissions by mutual funds, which could be a conflict of interest. Finding out what method each advisor uses – and hearing from them why – will help you determine which fee arrangement seems best for you.
- Find someone who matches your style.
As with any relationship, you will want to work with someone who seems compatible. If you like to have input on investment decisions, for example, you won’t want to work with someone who prefers to have you sit back and follow all their advice. Still, remember you’re not searching for someone to hang out with, but rather a business partner. If you’re talkative, someone quiet and introverted might not feel like a right match, but that person could have the attention to detail and personal integrity that would make them a great advisor for you.
The Touch score on each of your Positivly Financial Personality Assessments can help you and your future advisor determine compatibility in how you both prefer to communicate.
- Discover your financial personality.
Save time and take our Financial Personality Assessment to help you find advisors who are like-minded and aligned with your style. This three-minute self-assessment will help you discover financial personality traits you may not realize you have. After taking the quiz, you can get recommendations of advisors in your area whose financial personality traits are similar to yours.