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Engineering Your Retirement, Part Two: Finding The Right Advisor Thumbnail

Engineering Your Retirement, Part Two: Finding The Right Advisor

Key Takeaways

  • A good advisor in any profession will spend more time listening to you than talking (and selling)
  • Make sure your advisor takes the time to understand who you really area, what’s most important to you and where you want to go.  
  • A Personal CFO will oversee all aspects of your financial life, but still empower you to be the CEO.

As we discussed in my article, “Should I Do It Myself?” many successful people can manage their finances just fine on their own until they encounter a financial stress test. Job loss, disability, divorce, tax audits and stock market meltdowns are just some of the financial potholes that can quickly derail retirement plans and erode wealth accumulation. Even coming into an inheritance can be very stressful. By the time you get to a certain point in life, it’s just too complicated and exhausting to do it all yourself. At the same time, it can feel overwhelming to find the right advisor.


First, know that all types of professionals can call themselves “financial planners” or “advisors.” Some are very capable and others, not as much. Currently, there’s almost nothing to stop people from calling themselves and “advisor” on their business cards. Even for those in the industry, deciphering an alphabet soup of credentials, capabilities, promises and fees can be exhausting. Meanwhile, your CPA, estate attorney, insurance agent and golfing buddies may all be giving well-intentioned, but conflicting advice about retirement planning.


Personal referrals can be a good place to start. Make sure you are getting a referral from the “right” person, not from your friend who always seems to be in financial straits. Your CPA can be a good source of referrals since they’re held to a very high ethical standard and they know your financial details so well. Just remember that everyone’s situation is different. Don’t assume your friend’s advisor, or your CPA’s recommendation, is the right advisor for you. It pays to take the time to shop around.


Make sure you gain an understanding of the structure and method of compensation your advisor will receive. This is important to understand the potential financial drivers behind an advisors recommendations. Most broadly, an advisor will either be compensated an ongoing fee-for-service or an up front commission for completing a transactions (sale). Neither one is always the best, but you should know if your advisor will, or wont, be compensated to continue to assist you with your financial concerns in the future.

I have structured my business so that I have a true relationship with our clients. It is not transactional, but an ongoing relationship. Every advisor website should have a link to Brokercheck.FINRA.org. This is a site to that allows you to check the background and experience of any financial advisor, broker or firm under consideration. It will tell how many years of experience an advisor has, types of licenses and credentials they have earned, and any regulatory actions, arbitrations or complaints that have been filed against them.

I’m very proud to have earned the Certified Financial Planner certification (CFP®). Don’t automatically dismiss an advisor who is NOT a CFP® professional, but the credential does show a strong dedication to our profession. On top of needing a Bachelor’s degree and at least two years of experience in the industry, a CFP® certificant must pass six demanding classes and tests, plus a rigorous final exam. Most importantly, a CFP® professional must commit to ongoing continuing education (30 hours every two years). 


There are great advisors at all-size financial organizations, but whomever you decide to work with, make sure you are a high-priority client. It’s perfectly acceptable to ask a prospective advisor how many other clients they are working with and the minimal amount of investable assets they require to be one of their clients. If you sense that you are on the smaller end of their client scale, or if you’ll be just one of hundreds of clients that the advisor is trying to keep happy, then you might want to continue your search.

By way of example, we limit our client roster to just a select number of families who have at least $500,000 in investable assets. That means they’re reasonably well off, but certainly not ultra-high net worth. As you can see, there’s a certain fit we’re looking for in our clients (and vice versa)—we’re not just wrangling money to manage.

Many companies, including those in the energy industry, hold free retirement planning workshops for their employees. These workshops won’t provide you with all the answers, but they can be very useful for finding out where you may have gaps in your financial plan. Since 2012, I’ve been conducting a series of workshops at major oil and gas companies in our area. The four-part workshops are part of each company’s employee benefit plans. The company provides lunch and makes conference rooms available after the workshop for clients to speak with us privately about concerns—all free of charge with no obligation to become clients. Some employees eventually become clients and some do not, but the workshops really help them see the light about all the things they should be considering about their retirement. 


As with so many things in our unfiltered digital society, you will find a lot of great information online, as well as mountains of unvetted content that will confuse you, misinform you or even try to scam you. However, one online resource that I strongly recommend is LetsMakeaPlan.org from the Certified Financial Planner Board of Standards, Inc. The CFP’s site offers a list of 10 key questions to ask your current or prospective financial advisor. The site’s search tool enables you to find qualified financial planners in your area and you can filter search results by fee structure, expertise and dozens of other criteria.


Once you have located a promising advisor, it comes time to meet in person. Make some mental notes after you arrive. What’s the vibe like when you enter the office? Is the staff harried, stressed, friendly, calm? Does the advisor seem to be listening to your concerns or is he/ she trying to sell you on the firm’s capabilities? Can they explain how the new client onboarding process works (if they have a formalized process), and how often they’ll meet with you once you’ve signed on? Can you imagine a lifelong relationship with this advisor? Do they seem young enough to be practicing 10 or 20 years from now? Do they seem like they’ll be able to connect with your children after your kids inherit your wealth? 

No two firms bring new clients into their fold the same way. Our firm uses a Discovery Meeting when first meeting with a prospective client. It’s an in-depth 90-minute conversation with you and your spouse. We dive into all of your values, concerns and life goals. We really want to understand what makes you tick. The outcome of the Discovery meeting is a Total Client Profile. It contains all that is important to you in life, neatly organized into seven key area

1. Your values.

2. Your goals.

3. Your most important relationships.

4. Financial concerns.

5. Network of outside expert professionals.

6. Desired communication and involvement.

7. Interests.

After understanding what is most important to you, it is our job to help you get there.

After the Discovery Meeting, we hold an Investment Planning Meeting before having a Mutual Commitment Meeting to determine whether or not we should work together. Not everyone is a good fit—and vice versa. Either way, prospective clients who take the time to meet with us receive three very valuable things all at NO CHARGE. The first, a Total Client Profile containing a summary of all the things most important to them in life. Second, is a Detailed Review of their current investments and recommended adjustments and finally an Evaluation of their Progress toward meeting their life goals.

Armed with this information about a prospective client, we will confirm they are on track and should keep working with their current advisor, confirm that we can bring a tremendous value to them and that we are a good fit to work together or refer them to another advisor who might be a better fit. We call this our free Second Opinion Service.


There are pros and cons to using advisors from both small firms and from large financial services companies. We’ll discuss this in more detail in a later article. Regardless of where an advisor hangs his or her hat, they need access to the expertise of other professionals in terms of investment research, tax planning, legal, insurance, etc. It doesn’t matter whether those experts are in-house or outside as long as they are top-notch. The advisor also needs strong administrative support so client issues are addressed quickly and correctly. Further, advisors need to ensure that clients understand exactly where their money is held and what precautions are being taken to keep it secure from fraud.


Some firms will use simple spreadsheets, binders and PowerPoint charts. Others may overwhelm you with enough technological horsepower to launch a rocket to the moon. We’ve found a good balance by using eMoney. It’s powerful enough to run financial projections, complex calculations and Monte Carlo simulations—i.e. financial “stress tests”—plus other “what if” scenarios. But, eMoney is simple enough so that everyone can understand the output. Even better, it has an “aggregation feature” that allows us to connect with a client’s other financial institutions and a “Vault” where we can store a client’s critical documents and monitor for fraud. This gives our clients a complete picture of their financial life and how they’re tracking toward their goals.

This is just one of the many ways we function as a “Personal CFO” for our clients. We do all the legwork and calculations. We coordinate the outside experts. We provide an opinion, but our clients remain the CEOs of their financial lives who ultimately make each decision.


The following case study involves hypothetical couples, with various realistic experiences and is provided for illustrative purposes only. Due to the complexity of each scenario, we have combined them and are providing the solutions that were most applicable to their situation. The strategies provided may not be specific or applicable to your situation. This case study does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed. Please consult a financial advisor regarding your individual situation. Past performance does not guarantee future results.

Bob and Sara’s situation was fairly typical when they first came to us. They’re a healthy and prosperous couple in their early 60s, but they had some glaring gaps in their retirement plan. A CPA who is a longtime friend of theirs sold them some mutual funds long ago, but he didn’t provide any guidance or asset allocation recommendations. Bob and Sara had an old life insurance policy purchased from a former neighbor who was a property and casualty agent. It’s no longer covering all of their needs. In addition to an old 401(k), and stock options Bob received from a former employer, their estate plan is out of date.

Bob & Sara could retire any time and still buy a home in the mountains near Sara’s parents. They didn’t realize how much their accumulated stock had declined and didn’t realize that at their age, they no longer needed life insurance. Additionally, they learned that Bob’s pension was no longer growing, so we helped Bob and Sara reallocate the proceeds for their other needs and goals. We also noticed that their 401(k) was still very aggressively invested in U.S. stocks. We scaled back their risk level to reduce volatility and helped them diversify globally, which allowed them to gain exposure to opportunities in international stocks. This way, they wouldn’t be so vulnerable to swings in the U.S. stock market.

Lastly, we had them sign an authorization form that permitted us to communicate, collect and share information with their CPA, attorney and insurance agent.

WM = IC + AP + RM

The example above is what we believe what separates true wealth managers from mere investment generalists. According to research from CEG Worldwide, just one in sixteen financial advisors (6%), provides true consultative wealth management. That’s a holistic client experience that includes not only investment consulting (IC), but a full suite of advanced planning (AP) services, plus and well-defined client relationship management (RM). The idea is to help clients make smart financial decisions about all areas of their financial lives—not just investments—and to ensure they are moving toward their goals as efficiently as possible. That includes staying in touch via a customized schedule using the client’s preferred modes of communication. We also work closely with a client’s other professional advisors and coordinate their efforts on the client’s behalf. We use the shorthand WM = IC+AP+RM.

As you do your research, you’ll find that most advisors don’t provide AP or RM. The advisor-client search process is a two-way street. Our firm only adds a small number of families every year to our client roster. When we find a good match for our firm, the process or working together is quite fluid and enjoyable. As we discussed earlier, sometimes it is hard for people who have never worked with an outside financial advisor before to trust one. But, once they reach their late 50s and 60s—and life gets too complex to be DIYs--they tend to appreciate fully the value that a good advisor can bring.


As I discussed in my last article, the best advisors function as your “Personal CFO”—they oversee all aspects of your financial life, but still empower you to be the CEO who makes the ultimate decisions. Research from CEG Worldwide shows that while only one in 16 people calling themselves financial advisors provide true consultative wealth management, those that do, tend to have six important traits in common. We call those traits the 6 C's. Let's look at them one at a time.


Character is about the personal qualities that successful people want to see in their financial advisors. Integrity is perhaps the most important quality, but trust and dependability also rank extremely high. Your advisors should do more than simply tell you they are honest, trustworthy and dependable. They should demonstrate good character through their actions. Ask yourself: "Do they consistently have high-quality conversations with me about my values?"


As mentioned in my previous article, chemistry is about your advisor's ability to be in-sync with you. Are you on the same wavelength when it comes to your important financial and life issues? The discovery process (if a firm has one) is key to demonstrating this quality to you. Once you’ve gone through the discovery process, your advisor (or prospective advisor) should understand what you care about and connect with you on a fundamental level.


Your advisor must be genuinely concered about your well-being. Do they demonstrate caring through their discovery process? Your discovery meeting with a potential advisor should uncover not just your financial issues, but your most important relationships, interests, goals and dreams. If your discovery process stops short of uncovering what’s most important to you, then think about moving on.


Competence is about being smart, technically capable and an expert in solving your unique financial challenges.


Being cost-effective means delivering true value for the cost of your services and products. Do not confuse cost with value. Affluent people are generally willing to pay premium prices, but only when they believe it is worth the cost. An advisor should be able to address your entire range of financial concerns, including those beyond investment management. At the end of the day, an advisor should be someone you can count on any time to provide you with financial confidence—that’s the highest value a financial advisor can provide.

This is the most important of the six Cs. When an advisor is consultative, client relationships are framed as ongoing partnerships over time—not one-off meetings or transactions. Being consultative, is the single most effective characteristic an advisor can have for building client loyalty. While many financial advisors talk about being consultative, in our experience a true consultative approach is rare. There are three central components to a truly consultative approach:

• COOPERATIVE ORIENTATION. Is your advisor willing work with clients in a collaborative relationship?

• CONTACT. Will your advisor contact you frequently about both financial and non-financial matters such as family milestones, current events, family dynamics, etc. Will they maintain this frequent level of relevant contact long throughout the relationship, not just in your first 90 days?

• CUSTOMIZED COMMUNICATIONS. Does your advisor blast out one-size-fits all communications to clients or can the firm customize its communications for you based on the format, frequency and relevant topics you prefer? A good advisor will have uncovered your communication preferences during the discovery process.


By keeping the 6 C’s in mind, you’ll soon wind down your list of potential firms to those with the right combination of technical competence, empathy, listening skills and outside expert contacts to meet your needs. You will know very early in a conversation when you’re hitting it off with a potential advisor—and when you’re not. Your gut instinct is usually right.