Words by Bryan Snelson
I felt a burning knot form in the pit of my stomach several weeks ago as I read about the scandal involving the large British bank Barclays, and the allegations that senior executives were complicit in a scheme to rig bids related to what is known as the Libor rate. The discomfort that I felt came about because it hit too close to home. My livelihood is entirely dependent upon the trust my clients have in me and my ability to serve their financial needs in an honest, ethical and competent manner. With each transgression by any key political, financial, government and clerical leaders or institutions, trust becomes more fragile.
Over my many years in practice as a financial advisor, I’ve witnessed an uncomfortably common situation that can have harmful long-term effects as baby boomers step into retirement. I’m speaking of misplaced trust and the dire financial consequences that all too often occur as a result.
We are fortunate that none of our major financial institutions found themselves in the kind of financial or ethical hot water that far too many of their global peers have landed in over the past five years. There is a world of difference between trusting your financial institution to remain solvent and trusting the employees of that institution to act in your best interest.
Trust is supposed to be hard won, yet easily lost. How, then, does someone earn your trust? Here are five tips to help you to discern if your financial advisor is not only worthy of your trust, but also your respect and most importantly, your money:
1. Is the advisor candid with you? Does he or she give you full transparency on why they have made a particular recommendation? You don’t want to be surprised by hidden fees or learn later than they were offering a particular product or service simply as a result of a conflicted relationship.
2. Are the advisor’s recommendations delivered to you in a manner that makes sense? Don’t be ashamed to ask the advisor to simplify an explanation if what they are saying to you doesn’t resonate. That’s part of their job. The best advisors can readily explain complex concepts in understandable terms.
3. Is your advisor keeping current on the events that may be unfolding in your life? An investment strategy that made sense for you while you were working may no longer make sense if you lost your job, or if some other major event transpired.
4. How accessible is your advisor? It would be na?ve to think that a busy professional would be available at the snap of your fingers, but it is reasonable to expect that your calls and emails get returned in a timely manner, either by the advisor or a qualified member of their staff.
5. Does your advisor give you a reasonable amount of time to consider a recommendation before making a decision? Some simple decisions may not need a lot of deliberation but it’s only fair that if you need some time to ponder, that time should be accorded to you.
The good news is that the vast majority of the financial advisors whom I’ve met and whose work I have had an opportunity to review are honest, diligent and ethical. Regrettably, that minority of advisors who do not possess those attributes can hide in plain sight and have the ability to cause much harm to an investor’s best laid plans. When in doubt, think of that famous quote from Ronald Reagan during his disarmament talks with Mikhail Gorbachev: “Trust, but verify.”
Bryan Snelson is vice president, financial advisor and branch manager with the City Centre branch of Raymond James Ltd. His views do not necessarily reflect those of Raymond James Ltd. and his column is for information purposes only. Raymond James Ltd. is a member of The Canadian Investor Protection Fund. Bryan can be heard twice daily on JAZZ.FM91, at 6:40 a.m. and 4:40 p.m.