Having clarity about the type of relationship you want with a financial advisor will save you time and reduce frustrations while searching for your ideal financial planner. It will also help increase the odds of finding a lasting relationship that will provide you with financial peace of mind.
There are 5 factors that will help you determine what type of advisor is best for you.
1. The level of financial assistance you're seeking
2. Your financial acumen and interest
3. Time available to manage your finances
4. Complexity of your situations
5. Whether you are a doer or a delegator
If you're unsure about the type of relationship you want, here are a few questions to help you clarify your best choice:
- Am I interested in self-management of my finances, or would I rather find a trusted financial advisor to whom I can delegate much of the work, so I can focus on other priorities?
- How have I handled my personal finances thus far? Am I heavily involved in the preparation of my own tax return? Do I pick my own investments? Or have I counted on others to help me?
- Am I looking into using an advisor for a one-time need or specific project, or do I have longer term needs that require periodic check-ins and nurturing?
- Is my financial situation straightforward and easy to “keep my arms around,” or is it complex with a lot of moving parts that are hard for me to manage?
- When presented with a good idea, do I like to do my own research and implement, or do I prefer to have someone present ideas, offer recommendations and implement on my behalf?
- Thinking about my overall finances, what do I want to handle myself? What would I prefer to delegate to someone else?
It’s not unusual for people to self-manage their finances and later reach a stage in life where they decide to seek help. Common reasons for seeking help are: increased complexity and financial concerns; there’s more at stake and you no longer have the time to recover from financial mistakes; discomfort with handling growing assets on your own; and a desire to spend time on other things.
On the Desired Relationship with Your Financial Advisor worksheet you will find a sliding scale to mark where you fit on the four engagement considerations. Noting overall where you fit on the scales should help you identify the type of advisor that may be right for you. For example, if your marks are mostly towards the right a Personal CFO, multi-family office, or if you’re really wealthy a family office may best meet your needs.