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You can research all of the ‘right’ questions for finding the perfect financial advisor…But you may not know what to do with the answers.

And if you don’t know what to do with the answers, how will you know if it helps your plan?

It’s easy to lose yourself in the number of clients, a track record, or even prior success. But an investor should be about you and your plan, not everyone else.

In this episode, I reveal the 5 most common questions to ask a financial advisor (and how to twist them in your favor).

Show Highlights Include:

  • How to tell if a financial advisor is using science to invest your assets (or playing the guessing game). (4:55)
  • How to tell if a financial advisor’s clientele makes (or breaks) the attention your investing gets. (7:22)
  • Why your financial advisor needs a “backup team” to assist in your retirement goals. (11:09)
  • How to avoid investors who live in the classroom and find someone with the experience to put your plan in place. (14:55)
  • How to find a fiduciary advisor who knows your plan like the back of their hand. (17:33)

To schedule your free retirement tracking meeting, specifically for first responders, head to http://pensionattention.com/ or call us at 805-409-8150.

Read Full Transcript

Welcome to Pension Attention, the best show for first responders who want to take control of their finances.

After advising Los Angeles city firefighters for over 12 years, financial advisor, Brad Barrett now shares how you can grow your wealth, build your legacy and enjoy a life of freedom. And now here's your host, Brad Barrett. [00:19.9]

Brad: Welcome to Pension Attention, the show for you, first responders who want more out of their deferred compensation and pension plan. My goal with this podcast is to reach you where you are. At whatever stage in your career, you are in, in order to provide my nearly 15 years of experience working exclusively with both active and retired service members on their investment and retirement planning. My team of fiduciary advisors here at One Capital Management are dedicated to ensuring you not only take control of your finances and build the life you deserve. Before we get started on today's episode, to find out more about me or my team here at One Capital Management, you can go to our website at PensionAttention.com or you can give us a call. You can call us at (805) 409-8150. And as we do each and every week, I want to say a big shout out to each of you who are listening here each week, thank you for the text and the emails. I really appreciate the feedback and if you haven't already done so you can go to our website again at PensionAttention.com. You can click on the media tab and there you can download and subscribe the Pension Attention podcast and leave us a review. Leave us some feedback. It's always good to hear how we're doing. And if you like the show, as I say each week, tell someone you like, if you don't like the show, I guess tell someone you don't like. But I want to talk about something pretty important today. And it's something I've been noticing in having this podcast and the radio program we have locally here in Ventura county and LA county, and a lot of the calls we've had in our, some of the questions we're getting as a prospective advisor to them, to you for any of you listening right now, who aren't working necessarily with us, or if you're looking to seek that counsel through an advisor, and I've been doing this nearly 20 years at this point. So, I've seen all the questions. And as I share with you each and every week, and for clients listening right now, you know, I'm always sitting on your side of the table, especially with this kind of stuff. So, I want to almost arm you with some of the questions you should ask or should be thinking about when you're interviewing a potential advisor. [02:19.5]

So, today's episode, I've actually titled the top five questions you should and should not ask when interviewing a financial advisor. Now I've tried to compile nearly 20 years’ worth of questions from varying different people in varying different financial situations and all of their concerns and questions and comments around seeking that advisor and finding the right financial advisor does take more thought than asking the same old questions or Googling, maybe even some of the advisory questions you should ask or what it is to ask about a financial advisor. And here's where people are going wrong. That's what I want to start talking about is what you should not do, and then what they should ask instead. And it's interesting because this actually came to light a couple of weeks ago, I had a prospective client call in and the first thing that they asked was for us to send them our form ADV part two. That was her only question. [03:21.0]

Now this is an SEC filing, which is essentially a marketing brochure that duplicates really information that's on our website. So obviously we sent it not a problem, but of course we're certain, it didn't really tell much about what we do and how it would or would not match this person's needs. Now for any of you clients listening, right, you know, me and I'm very jovial about my questions and really want to get involved and get to know any current client or prospective client coming in. And I didn't want to pry, but I had to ask, Hey, that's a very specific question to ask about specifically only our form ADV part two. And they go, yeah, you know, I just I'd heard about this from a friend, and I Googled it and they just said, that's what I should ask. Now, a search like that points out a big problem. And really what I wanted to talk about today. [04:11.2]

Everyone's reading the same information. People tend to stop at whatever comes up first. Wouldn't you agree? I mean, with the result really being that everyone is following the same checklist for finding a financial advisor. Now, my point is this, unfortunately, what I feel is this approach doesn't necessarily give you specifically you the information that you need to make the best decision. Now we're familiar. I am familiar with these internet checklists because so many of our prospective clients use them. And that's great, but here are five common questions, but the answers don't tell you what you need to know about planning for your financial future. So, I'm going to ask the five common questions. I'm going to give you the five common questions. I'm going to go through what we should ask instead. [04:54.3]

All right. Starting with number one. What is your performance track record? Now, aside from the fact that past performance does not indicate future results, as I'm sure you've seen, performance is very much tied to the choices that both the advisors and the clients make together. So, a good financial advisor should help you determine your goals and how you will get there. This question also conveys a sense that the client is attempting to beat the market rather than focus on his or her unique situation and really the need to generate income in retirement. Now, we understand that nobody really wants to hire a so-called advisor who gambles with clients' money. No doubt, but the way to ferret out a lack of philosophy is to learn whether the advisor takes a scientific approach using evidence-based investing versus simply guessing which stocks or funds may outperform other securities. Here on capital management, our investment philosophy, as you can read very clearly on our website is to build customized and tax efficient portfolios designed and aligned with the unique investment plan for each client to achieve investment and really ultimately legacy goals. It's not just, Hey, we're feeling this this week, so this is what we're going to do. It's tried and true. We have a track record that goes back nearly 25 years by rebalancing, actively managed globally diversified portfolios. [06:27.4]

So, as I mentioned, I'm going to do through this list is to provide the common question that's being asked. And then here's the point where to say with question number one, which again is, what is your performance track record? Something everyone thinks about. No doubt, but it's a very common question when interviewing or seeking an advisor. But what I feel like you should ask a better question would be to ask about the planner or the advisor's investment philosophy and approach to building financial plans or wealth forecast. What I just mentioned about us is to understand our philosophy, where we place assets globally, how we manage those assets actively and in a rebalanced structured. And then more importantly, mostly is building it unique to you. A custom portfolio, unique to you is very much advantageous. Knowing those things about an advisor you're looking to seek is really important. [07:20.9]

Now, number two, the number two most common questions. How many clients do you have? Okay, this question tells you something about an advisor's practice, but what? Right. And how does that fit into what you need? Now does an advisor have only a handful of clients because all the other clients left or because the practice has a very narrow specialty. Does an advisor with a lot of clients offer better advice or take a cookie cutter approach because there are just too many people to serve effectively? What I want to state here, is this not a bad thing to ask, how many clients do you have, but I want you to ask instead is what types of clients do you work with? Or maybe how long does it take to get an appointment? Or what is your meeting process? Or maybe even what are reasons that people leave your practice? These are all really good questions to go through versus just blanketly saying, how many clients do you have? Because that may give you a number but doesn't give you an answer. [08:20.0]

So, what types of clients do you work with? I'm going to answer that for us today. Here at One Capital Management, my practice, Toby Rodriguez, my advisor partner's practice is solely focused on first responders, police, and fire. How long does it take to get an appointment? As soon as you're ready, we're ready. What is your meeting process? If we're meeting with a new client, a prospective client, maybe someone listening right now who doesn't work with us, we do, what's called a discovery process to really understand where you are in your career, both the quantitative that's nerd word for the numerical or the numbers-based side of your plan, but also the qualitative side of your plan, your goals, your values, your interests. For many of my clients that call them that are in their twenties and thirties, they're maybe five, 10 or 15 years into their career. They're maybe just still starting families. They're looking to buy their first home. Maybe they just bought their first home. That may be a different conversation as you can see, then someone who's calling me, that's got 25 years on the job looking to drop. So, it's you got to understand when we go through the discovery process, that's the meeting process. now for our clients and many of you listening right now, we do reviews, and those reviews are great. It's a great time to catch up on just life, but also what's going on in the portfolio, in the investing world. One of the main reasons why I wanted to do this podcast was each week. I want you to hear my voice and go through some of the things that we're talking about individually. [09:42.4]

And so, you hear that from an investment side, but also a planning side, which is as important as you've heard me say here each and every week, the planning is as important as the investing. In fact, we need the planning to be done so we know how to invest properly. So instead of asking how many clients do you have just to get a number from a prospective advisor, you're looking to go with, go a little more granular and say, what types of clients do you work with? And what you're really asking there is, am I one of those clients that you would be able to serve me right? And when I call or I email, can I get an appointment? And then understanding what is the meeting process? Now, one of the things that I've always asked my clients is when we engage each other is one of the questions I ask is how do you want to be served? And that question comes around that third question of what's your meeting process. I have some clients, that say, Brad, I trust you. I get it. I'm busy. Just I'll see your quarterly reports and we'll see each other every year or two. Fine. I have other client who say, you know, I'd really love to talk to you every quarter, every month. It's really important for us as advisors and a good advisor should ask you how you want to be served, which helps with the meeting process. [10:49.7]

Do you know how much you should be contributing to your deferred compensation plan? Are you getting the most out of your current investment options? Looking at entering or about to exit the DROP program? Go to www.pensionattention.com to find out how we can help. [11:05.3]

All right, number three, what services do you provide? Now the answer to this question should match the services you need. Wouldn't you agree? Or that you think you need. Now an advisor who works with let's say, high net worth families, or manages 401k plans, or maybe an advisor, “who says he's an advisor,” but just sells insurance may not be the best person to help you with a retirement cashflow management plan or a custom-built deferred comp plan that takes into consideration all the ins and outs of your job. And we want to watch out for small practices that seem to offer everything because they may not have a depth of expertise in any of those areas. And I see practices that list 30 areas of expertise. When I look at colleagues around us, they're listing like a bunch of areas of “expertise” in many of which require different skills and knowledge or experience in. So instead of asking what services do you provide, ask a potential advisor to walk you through their process for clients, especially what will happen in the first meeting and maybe the first year, then I would say, follow that up by asking, what network of support do you have to provide all the services that I need? [12:24.3]

It's likely that no one person you're working with can help you with everything from a budget to investing to retirement withdrawals and estate planning. So, it's important that the person you're working with has access to let's call it a backup team if necessary. So, we want to see what kinds of experts are available to work on your behalf. Now, I want to go back up to the top there for a quick second, and talk about the experience. One of the things that I've shared in many of you listening, probably know this when I'm at stations, but the reason why I got involved with first responders was because of my stepdad. I grew up and he first responder family. My mom was a teacher, and my stepdad was a battalion chief. Well, he became a battalion chief for LA city. And what's important about that was knowing the job type. Being a child at that point, being raised in the family of understanding there's 24-hour shifts, not a nine to five understanding base pay versus overtime and sod days, how vacation and sick time plays into that. And then ultimately, when we were sitting at the drop appointment, when I went with him as an advisor already in this world, and I went with him to sit with them for the drop, it shocked me how it was just so plain vanilla cookie cutter, not even advice, just suggestions. And he was really looking to me to help him answer it. I realized, you know, what a lot of these guys that I grew up with, I want to make sure that you knew that there's someone who not only has the expertise as an advisor, but also knows the fire and police family. [13:48.7]

Those are important to look at with an advisor. It may not be solely for you, but it is something you should consider. And that's what I want to bring up to you. Now, the second part of that is here at One Capital Management, we don't do estate planning. We offer estate planning advice through our estate planning network, same thing with tax advice. So, one of the main questions we get from clients is, Hey, I need to get my taxes done, or I have a tax guy, but he's so sell or whatever. We have good colleagues and good networks. What we call strategic partnerships. Many clients listening here have benefited from that. And the best reason why we do it that way, instead of hiring a CPA to have on staff or an estate planning attorney is I want best practices. I want you to know that it's not an unbiased approach because I'm paying a salary for some guy to be on staff and he's my accountant for all my clients. I want to go and find two or three that you can interview with me with you and find out which one works for you because having a good team approach is really important to the success of a financial plan. So, the bench, if you will, the depth chart that we've created here, one capital management serves our clients well. [14:54.2]

All right, number four, what credentials have you earned? You probably thought this or Googled this. So, the question we get commonly is what credentials have you earned? Now in our space, the financial services area, there's various credentials that require time and study to earn no doubt. And they do matter, but they don't tell the entire story. The certified financial planner designation is increasingly common in the industry in many firms have at least one CFP on staff. I myself hold these certified financial planner designations. And I'm proud of that. It took me a long time to get it. And it was something that culminated after my, at that time, nearly 15 years of experience helped me earn. And I'm proud of that. And it's good for you all to know that that I am a CFP, but I'm just want to say this is, that doesn't mean that I'm right for you. Again, going back to the top, looking at all the other questions and making sure it fits for the experience, you're looking for, the knowledge and wisdom in the space, the designations that enhance that, or promote that if you will. And then ultimately, do you like the advisor? Do you have that gut feeling about them? I spoke last week, as you all remember about emotional and rational investing. And a lot of it has to do with our decisions in general and this is one of them. [16:11.1]

There is something to be said about sitting across from somebody or having a conversation with someone on the phone or via zoom and saying, you know what? I like that guy. I can see myself working with them. That's important too. Wouldn't you agree? Now, others in the industry have lots and lots of credentials, but that could be because they like taking classes more than doing the work of an advisor. So be careful of that. I've seen a lot of guys with what I call the alphabet behind their name, whole bunch of designations, and that's all great, good for them. But again, they just may like taking classes more than being an advisor. So, you should look for credentials, but experience is a big one too, to help you meet your needs. So instead of maybe asking what credentials have you earned, maybe ask what experience do you have in helping investors like me? And how long have you been giving advice to clients with my needs? That's maybe a flip to that question for me, as I've wanted to do for each of these common questions is I'll tell you about me as an advisor, us as a firm of advisors is me personally. I've been doing this for nearly 20 years, almost 15 years with first responders solely. So, my experience and the timeframe I've been doing it is relative to each first responder listening right now. [17:28.6]

All right. Number five, the final common advisory interview question is, are you a fiduciary? This word is become so big for so many people, it's almost crazy. Now I say that only because inherent to us here at One Capital Management, being a fiduciary, which basically means having the client first always has been inherent in everything we've done since the formation of our firm in 2001. So, it's just interesting that all of a sudden it became a word that the department of labor has put out there as making sure that well, really making to protect investors, which by the way, I'm all for. And it's a good thing, and it's a loaded question. Are you a fiduciary? I want to very clear on the onset we are. And we are because everything we do puts the client first. Now, instead of maybe asking, are you a fiduciary, might want to ask all advisors receive some form of compensation for their services? So, a better question is to see how the advisor is compensated. So, if you know that up front, you'll have a better sense of whether the advice you receive matches the price you pay. Our management fee is not, and I want to repeat not commission related. We do not receive commissions on security transactions, nor do we receive compensation from third-party investment companies. We are fiduciaries, always acting in your best interest. I want to be very clear as we're talking about this here at One Capital Management, that's how we operate. [19:00.2]

So, the only time we'll ever receive a commission is if we did a product such as an insurance, which is how those get paid to help fit or fill an insurance need for a client, but anything regarding security transactions, we don't receive commissions on. And that's important to know from us. But it's a great question to ask when you're talking about a fiduciary and interviewing an advisor to make sure that those match up with what your goals are as an advisor. So, I wanted to provide the top five questions that I could think of that are being asked by a lot of prospective clients that we see, that I know is out there. And I want to provide a couple of things after that. One is I wanted to provide maybe an inverted way to ask that question or said differently. What are we really asking and kind of educate along the way for those prospective clients out there are those people listening right now that don't have an advisor. That's important. And number two, I want you to know a little about us, because I want you to know, as an example of someone speaking here as an advisor of how our structure is operated. And ultimately, I believe the financial services industry is better off when clients like you ask good questions and are knowledgeable about this space. [20:14.4]

We want to help you or refer you to someone who can better meet your needs, if that is the case. One way is for you to understand what you asking and how it ties to what you need to know. And I feel that what we've done, and this may be biased, I'll be completely open about it is what we have done to solely focus on first responders, knowing your plan like the back of our hands has been so important to us. And it comes from experience being raised in a family and working solely with so many active and retired members. So, when we meet with a prospective client or calls in, we feel very confident that we are there to serve them, and we have the knowledge and experience and the platform, if you will and all of it's set up to be able to do that. And again, I mentioned this episode, this week of the questions to ask, because I feel it's a far better approach than maybe using a standardized internet checklist. [21:09.4]

So hopefully you enjoyed this week's episode on the five questions you should ask. And then maybe what you shouldn't ask when interviewing a financial advisor and as always before acting on anything, discussed today remember speak with a financial advisor near you and ask some of these questions we went through, or if you'd like our help, give us a call. You can call us at (805) 409-8150. You can also go to our website at PensionAttention.com. I look forward to speaking to you next week until then stay safe. [21:40.5]

The information in this podcast is educational and general in nature and does not take into consideration the listeners personal circumstances. Therefore, it is not intended to be a substitute for specific individualized, financial, legal, or tax advice.

To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a final decision. [22:03.8]

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