How to Evaluate Your Wealth Management Firm
Tré Bynoe CFP?, CIM? (INTP)
Financial Planner for Business Owners & Incorporated Professionals | Data-Driven Strategies ? Risk Management ? Fiduciary Pledge
Trying to put myself into the general public's shoes, I was researching how I should evaluate my financial advisor. I found a good article from Forbes and another decent one from Investopedia. You can find the link to these two articles at the bottom of the page.
Both hold some sound principles; however, they miss something important: you may need to re-evaluate them throughout your relationship. Here are a few reasons why:
1. Your Advisor Hasn't Done a Complete Re-Evaluation With You in a While.??
Things change, best practices change, circumstances change, and an advisor's skill set should improve. I've been running into business owners recently taking compensation based on outdated calculations. After a slew of tax changes, the math is clear: most small and medium business owners?should?take some of their compensation through salary, not only dividends. Yet many advisors haven't recommended this change—sticking with the math done five years ago. It's best practice to start from scratch once in a while so you know you're up to date on any changes.
2. They Don't Challenge You.
Like any other person, advisors don't want to upset you—avoiding conflict is easier. Let's say your advisor brings up holding key-person insurance in your corporation. You reply, "My aunt had life insurance; they didnt pay out when she died, so it's a waste of money." If the advisor leaves it there, worried about upsetting you on a sensitive topic, and something happens, it's their fault you didn't have appropriate coverage. Part of being a financial planner is having hard conversations. Our job is to help you make the best choices, even if it directly contradicts something you believe or makes everyone uncomfortable. A good financial planner is an educator.??
Trusting your financial advisor and feeling confident they have your best interests at heart is essential to a healthy relationship.
3. Your Financial Position Has Drastically Changed.?
Personal finance can be pretty complicated. There are many intricacies to learn, and a financial advisor's understanding of them will vary. Part of the reason I specialize in helping small and medium business owners is because of the complexity. That complexity is beyond the scope of expertise for many. That's why I don't advise high-up military personnel, politicians, or publicly traded company owners. It's simply outside the scope of my expertise. Most financial planners only learn about the complexities surrounding an employee's retirement. After all, that means they can help at least 96% of the population! If you fall outside the scope of an advisor's knowledge, it's time to re-evaluate.
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Evaluating your financial advisor is essential to ensure you are on the right track to achieving your financial goals. Regularly reviewing your advisor's performance, having difficult conversations, and ensuring their expertise aligns with your financial needs will allow you to trust that they are still meeting your needs.
?If you'd like to know more, please visit my website - www.trebynoe.ca
The information contained in this report was obtained from sources believed to be reliable; however, we cannot represent that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities. The views expressed are those of the author and not necessarily those of Credential Qtrade Securities Inc. Mutual funds, other securities and securities related financial planning services are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.