How to Choose a Financial Advisor: Ask the Right Questions

by Benjamin Beck, CFP® Benjamin Beck, CFP® | April 19, 2023

Recently, I was in a conversation with somebody who lives in my town. Knowing what I do for a living, he asked if I could recommend someone at Beck Bode who could “…take a look at our portfolio and recommend a few adjustments.” 

I know he didn’t have any negative intentions, he probably wasn't even conscious of the implications of his request, but just take a moment to examine the two concepts he brought up with this seemingly harmless question. Essentially, he was asking me, “Do you have someone that can look over our portfolio and recommend a few adjustments?”

 Simple enough, right?

Here's what I heard when his request came through. First thing was, “Hey, we don't want a financial plan!” (Which by the way, is what we believe one  should have to be on the road to financial independence). Second, he said, “We just want a portfolio review.” What I hear in these words is, “I just want a quick look, not a major overhaul.” What I believe he is really saying is, give me what I want, not necessarily what I need. This is like going to a doctor when you suspect you have a brain tumor and then asking to be referred to a doctor that could prescribe you some Advil for a headache.

Speaking of doctors, I had a doctor's appointment a few weeks ago because my elbow has been bothering me. You may be able to relate, but I find that once you’re a business owner or involved in a professional setting, you pay more attention to how other people conduct their business. This is exactly what I was doing as I was waiting to see this doctor, who is one of the top elbow specialists in our area.  

As I met him in the examination room, he took me through a series of questions. He asked about everything that was bothering me, asked me to describe the pain, what kind of activities I engage in, and so on. I didn't keep count, but he easily asked me 12 to 15 questions. 

Let me tell you what he didn’t do: He didn't start out explaining his value proposition. He didn’t give me an elevator pitch. He didn't mention that he's the top elbow person in the area. He didn’t give me a pamphlet that showed all the accolades he’d received for his work. He only asked me questions to formulate a diagnosis. 

Reputable Financial Advisors Should Be Selective About Giving Financial Counsel

Now, back to the moment I had with this man in my town who asked me to give his portfolio a check-up. 

I responded to him as nicely as I could, saying that we don't have anyone at our company that would take on this “request.”  I said that as important as portfolio management is, the people that work at our firm are all financial planners first, who see portfolio management as a means to an end. To all of us at Beck Bode, the realization of our clients’ long-term financial goals is the number one priority. We do not make adjustments for performance, and therefore the plan itself is the foundation for our work, not the portfolio.

I said that I couldn’t imagine any good financial advisor would take on the management of a portfolio without clearly understanding the investor’s goals and objectives. Certainly, a reputable advisor wouldn’t take responsibility for a financial plan without understanding the investor’s goals and objectives. 

The reason I bring this up today is because my career path has been a journey from the kind of advisor who in the past would have responded very differently to this man’s request. If I’d run into this man when I first started out, and he asked if I could “give his portfolio a quick look over,” I would have jumped at the opportunity. 

I’m your man! 

Absolutely, let’s set up a time to talk! 

Tweak your portfolio? Sure, I can do that!

I went from being that person to being the person who not only wouldn’t take this assignment, but also wouldn’t give it to anyone else I know and respect. We literally don’t have anyone on our team that would look over someone’s portfolio and casually make some recommended “tweaks” without understanding their goals and objectives — or setting them up with a financial plan or a roadmap. 

And yet this happens all the time, right? Ordinary investors frequently have second thoughts: they wonder whether they are on the right path, they wonder whether they are being advised correctly. 

At Beck Bode, our hope is to eliminate this kind of client behavior by doing what this elbow doctor did with me. We aspire to ask as many questions up front as possible, so that both advisor and client can enter a relationship with a solid understanding of what that relationship will look like. 


Financial Advisor Red Flags to Look Out For 

Here is what we believe a reputable financial advisor should be asking you in the first meeting: What do you want? 

In other words, what do you expect from us as your financial advisors? What is it that you think we do? Most people don’t have an idea what it is that we do. Also, not every financial advisor does the same thing, so it’s important to ask, ”What is it that YOU do?” I'm convinced that most relationships that go “wrong” between clients and advisors it’s perhaps because the parties at a minimum began with a misunderstanding of what the other wants and does.


Red Flag #1: Enamored Solely with the Value of Your Portfolio 

Back to my own evolution as a financial advisor. I can tell you that one of the things that happens to advisors is that because they are human, they are prone to being hypnotized by a lot of money. 

Say somebody with $10 million asked me to review their portfolio — holy crap, I’m jumping on that. (That would have been my number when I first started out … but this is no longer the case.)  


Red Flag #2: Fixated On Getting Your Business Regardless of Fit 

Another one of my ailments back then was that I could cure anyone, including someone that doesn’t want to be cured, or someone who refuses to admit they have a need. Any “body” would do — if they didn’t want to be a client, I’d make them a client. This is not uncommon with many financial advisors. 


Red Flag #3: Overly Agreeable to a Client’s Investment Demands 

A third common ailment among our kind is what Jim and I throughout our career called “order takers.” We knew it because at one point we had fallen into the trap of order taking, too. The order taker is the advisor who takes orders from the client, instead of honestly telling the client what they need.  


Establish Clear Expectations When Meeting With a Financial Advisor

When Jim and I sat down and were honest with ourselves and each other, we would be able to identify some of these accounts where we had problems. Not that there were a lot of them, but for the ones that we did have, every single problematic relationship could be traced back to us not asking a lot of questions at the beginning of the engagement with the client. We hadn’t asked enough, “What is it that you want and expect from a financial advisor?” and “What is it that you think we do for you?”

The potential for misunderstanding what we do and what we don't do as financial advisors is probably as varied as the human experience itself. We don't know what you, the client, think we do! And you don’t know what it is that we know we do. Think about all the implications of this statement.

I was recently in a communications training with a group of people, where the facilitator asked the group to close our eyes and picture a cat jumping off a refrigerator. We were told to open our eyes and answer in writing a series of questions. Where did the cat land? What color was the cat? How did the cat land? What did the floor look like? And so on. What this exercise clarified is that every single person in the room had a distinctly different experience in their mind when they heard that the cat jumped off the fridge.

What I am getting at is that we make a lot of assumptions that are based on what we understand from our own experience. This guy in town who asked me to look at his portfolio literally does not know what we do, and I see no reason to suppose that whatever he does think is at all accurate. 

What does this have to do with financial planning and you choosing to work with an advisor who is going to do right by you? I believe that the person who asks the most questions in a meeting (distinctly opposed to the person who makes the most statements) is the one who adds most value to the conversation. 

Just like when I went to see this renowned physician. He asked the most questions, and I know that based on what he asked, he is going to be able to better help me get to the bottom of what’s going on with my elbow. But everyone expects this from a doctor, right? You expect a good doctor to ask you a lot of good questions, to take care with his or her examination, to give you undivided attention. You don't walk into a doctor's office and expect them to sell you something. That just doesn't happen.


How to Choose a Financial Advisor: Ask the Right Questions

I see my role, our role at Beck Bode, as being financial doctors. We perform the same role as physicians for our clients, in a financial sense. Of course, when you, the potential client, walk into a first meeting with us we can and do make some statement as to how our practice operates. But that isn’t enough because the reality is that you, the client, will forget. It’s human nature that you will forget what we told you. 

Where we — or any financial advisor who truly cares and is capable — can really be of great impact is in actively asking a lot of questions to uncover your goals and your motivation. Our job is to understand your “why” for being on this path to financial independence and to remind you of that objective when you inevitably forget. When volatile markets or fads and trends distract you from your goals, we will remind you why you wanted our help in the first place. 

If you’re working with a financial advisor, you need to be able to have an honest conversation about your expectations from the relationship. You, the client, need to be able to articulate what it is that you think the financial advisor’s role is, and what you want from them. You also need to ask the financial advisor to do the same: to tell you what they can do for you and what they cannot. 

If either of you — the client or the client advisor — anywhere, tangentially even, hear something being expressed about the real or perceived ability to pick superior performing funds or achieve a certain return, this conversation must be completely turned around. I don't care how much money the client has, or how convincing the financial advisor is, you both must consider that conversation ended.

In our practice, we do not ever want to take on a household where we know that someone is under the delusion of their own thought process regarding what we might be able to do for them. Similarly, you don’t want to work with a financial advisor who is under the delusion of their own thought process about things that are outside of their control — like market performance, for example.  

Asking these questions early enough in the process will make it clear to both parties what it is that each expects and make for a much more productive and enjoyable relationship. 

Learn more about Beck Bode’s investment management services.

Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.

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