Now that my “No Dumb Questions” video archive has become a proper collection, with more than 20 videos posted since our late-2016 launch, it’s time to take on an especially thorny patch of No Dumb Questions. I’m talking about questions related to setting up, working with and – yes – sometimes leaving your current advisor.
While a good advisor should welcome any questions you have about putting your money to its best use, you may feel uncomfortable about potentially “delicate” conversations like:
Today, I’ll take on that first one: What are your available advisory options out there?
If these are questions you’ve sometimes wondered about, but been afraid to ask your current advisor, my next few No Dumb Question videos are for you!
Even if you’re perfectly happy with your current relationship and you have no intention of ever leaving your partner, it never hurts to take a look around.
No, I’m not talking about your marriage! I’m talking about your financial advisor.
But, are you using your bank as a one-stop-shop for all things financial? If so, that cozy relationship may be more one-sided than you realize.
Yes, I’m afraid it’s true. Just as this Mercer Report “Relationship Counseling” spoof by the ever-excellent Rick Mercer suggests, your own “Norm the banker” has been seeing other investors.
Okay, that part is to be expected. But if you watch Mercer’s entire parody – and I hope you do – the real problem is this: Most bank and similar financial firm employees are driven more by their employers’ sales quotas and motivated by hidden incentives than you and your financial goals.
As I covered in my recent cautionary tale, [link to “cautionary tale”] that’s because a banker’s job is typically structured to be a combination of sales and customer service – with a strong emphasis on the sales part. And, by the way, that’s regardless of the job title – from clerk or teller, to senior advisor to vice president.
To put it more succinctly: When you ask your banker for financial advice, remember that you’re speaking with a salesperson.
As such, your banker or advisor may be fantastic at familiarizing you with the products and services available in their “store.” And when it comes to holding your discretionary income in a standard chequing or savings account, the bank is often a perfect fit for that role.
But! What about asking for wider financial advice about your overall wealth management? That’s essentially like asking any other vendor out there whether there might be a better fit to spend your money someplace else. Expect to be told that your bank’s proverbial “hammers” are the best tools for every job out there.
Fortunately, there is good advice out there, from advisors who have dedicated their careers to serving first and foremost as their clients’ personal Chief Financial Officer or CFO.
What does real advice look like? A true advisor should have the professional credentials to take on your total wealth management. They should be fully independent and not beholden to any particular boss, vendor or product provider. Their source of compensation and any other vested interests they might have should be transparent, and clearly aligned with yours.
Put another way, real advice should be laser-focused on helping you view your big picture, address your highest interests, and marry the best available solutions with your particular circumstances – regardless of where those solutions may come from.
Now, how do you find this sort of advice? I’m glad you asked. I’m Nancy Graham, and in my next “No Dumb Questions,” I’ll give you some questions you can use when you interview financial advisors for the role of your Personal CFO to your family’s wealth.
And, by the way, if you’ve got other thorny questions you’d like me to address in the future, please be sure to let me know. One other smooth move you can make right away is to subscribe and click the bell for more No Dumb Questions to come.
