In Financial Advisor, Individuals, Wealth Management

If you’re looking for a Seattle financial advisor, it’s important to find a provider who will be a good fit for your portfolio, goals, and needs. Toward that end, here are seven questions that are helpful to ask as you consider an engagement.

1. Are you a fiduciary?

Lead with this question, because it’s important. The fiduciary standard is the highest level of care in the financial service industry.

It consists of a duty of loyalty and care to the client. For example, registered investment advisors (RIAs) firms must always place their interests below that of their clients. The client must always come first.

It may sound strange, but in the world of financial services, current regulations do not require all financial service dealers to be fiduciaries. Broker-dealers and registered representatives that work at non-fiduciary firms must fulfill a “suitability” obligation. Under this obligation, if the registered representative believes that the product or service is suitable and benefits their client, they have satisfied the suitability standard.

Advisors who are non-fiduciaries can recommend investments that are “suitable,” but may end up costing you more. It’s best to work with a fiduciary.

2. How do you structure your costs?

Next, it’s important to know how your advisor will structure their pricing. I’ve written about the different cost models that financial advisors use here – if you’re interested in digging into the details, give it a read. For our purposes in this article, just be sure that you clarify how you’ll be charged over the course of your engagement.

You should look for advisors that are “fee-only,” meaning that they don’t receive commissions from selling products. Fee-only advisors may charge percentages, flat, or hourly rates, depending on your mode of engagement, portfolio size, and needs.

3. What are your qualifications?

There are many qualifications within the world of financial advising; you’ll find many Seattle financial advisors that list a string of letters and acronyms after their names to signal their certifications (and, by extension, their credibility and service offerings).

The qualifications to look for depend on the service being delivered – but here are a few common certifications to consider.

CFP – Certified Financial Planner

This certification is administered by the Certified Financial Planner Board of Standards, Inc., and requires up to 1,000 hours to complete. Practically (as the name suggests), CFPs are certified to deliver financial plans.

CFA – Chartered Financial Analyst

This certification is issued by the CFA Institute and is recognized internationally. It qualifies financial advisors for portfolio management and investment research, and it requires four years of experience and extensive education to obtain.

Will Hicks, Managing Director of Sapling Wealth Management, successfully passed his CFA exam in 1993.

PFS – Personal Financial Specialist

This certification is facilitated by the American Institute of Certified Public Accountants. It signals that an advisor is qualified for personal financial planning, including estate planning, retirement planning, insurance, and investing.

AIF – Accredited Investment Fiduciary

The ERISA rules and regulations that govern 401k plans often can be complicated and confusing. As such, the Center for Fiduciary Studies has a certification that is geared towards increasing excellence in advising retirement plans, such as 403(b) and 401(k) plans. Often financial advisers take on the responsibility of being a fiduciary on a 401k plan due to an existing relationship with an individual, but it is not a core part of their business. Therefore, plans which feel like they have outgrown their existing adviser can find this specialty designation useful.

Will Hicks, Managing Director of Sapling Wealth Management, is currently certified as an AIF and Sapling Wealth Management has over thirty 401k plans where it is named as the Investment Adviser. In addition to individual financial advising, retirement plan management is a strategic priority for the firm.

These four certifications are only a start. You should check with your advisor to see what degrees, licenses, and registrations they hold. Their qualifications will help you to determine their credibility and show you the range of services they may be able to provide.

4. What is your investment philosophy?

There are a range of different approaches to investing, and different financial advisors subscribe to varying philosophies. Ask this question, because it will impact the strategy your advisor provides. Some advisors may opt for efficiency and match you with more packaged services.

At Sapling Wealth Management, however, I take a proactive approach in delivering thoughtful, tailored advice that factors in each client’s long-term goals and financial risk tolerance. While we constantly keep an eye on the long-term, we recognize the advantages of being tactical when capital markets are volatile.

5. How do you work with key vendors?

Financial advisers should be able to work with a broad range of strategic vendors – accountants, small business lawyers, trust and estate lawyers, insurance agents and other important vendors. Also, to the extent you do not have these relationships forged, a financial adviser should be able to give you a few options to consider when selecting the appropriate professional if you don’t know where to go for help.

For instance, I believe that it is critically important to be able to effectively work and coordinate a team of professional advisers. This often means attending in-person or virtual meetings, as well as reaching out to be proactive about responding to a changing environment.

6. How will we communicate?

It’s also helpful to know the approach your advisor will take in communicating with you. Some investors prefer a hands-off approach – assuming there is trust built up with an advisor, they aren’t interested in hearing about their portfolio frequently. Others, though, want to be kept in the loop on all things as much as possible.

For most people, connecting with an advisor once a quarter makes sense. It will also make sense to schedule a more formal check-in at least once a year.

7. How will you measure success?

Your advisor should define success according to your goals. In fact, they should be able to help you more clearly understand what meeting your goals might look like. They should be able to maintain a big picture view, factoring in things like diversification and overall portfolio performance over rates of returns on specific investments. It is fair for a client to expect very clear portfolio benchmarking to their financial portfolio(s).

However, which benchmark should be used? Every client has a different financial risk profile, driven by facts and circumstances as well as personal preferences.

This is can get even get trickier, as the same person often has multiple accounts with different risk profiles and strategies. For instance, a retirement portfolio may have a higher “investment risk tolerance” than a taxable portfolio, which may be used for paying near-term expenses, such as taxes or education expenses.

When there are several accounts with different time frames and investment objectives, financial advisers will often write an Investment Policy Statements (IPS) for each account. This extra step clarifies what the client should expect from the account, in terms of a risk/reward profile.  While none of these steps can guarantee performance, they go a long way in terms of eliminating communication and planning mistakes.

Ready to get started with a financial advisor in Seattle?

As you consider whether a financial advisor is right for you and begin to evaluate your options for partnership, I hope that these questions are helpful.

If you’re ready to move forward with a financial advisor you can trust, let’s talk.

I’m the sole practitioner at Sapling Wealth Management, a boutique registered investment advisory firm that provides thoughtful, tailored financial guidance to individuals here in Seattle. I offer financial advisor services, including both customized financial plans and ongoing wealth management. You can view my personal wealth management service page for more details.

If you’re ready to grow your assets with thoughtful investment advice, we may be a good fit. Schedule a review of your portfolio today. Come prepared with the questions listed above (and any of your own!) and let’s take the first step toward figuring out what’s best for you.

Recent Posts