Have a podcast in 30 days

Welcome to Make your Money Matter, the show that aims to change the way we think about financial advice. So, you can make better decisions.

Brad Barrett is a managing director and partner at One Capital Management, a wealth management firm serving nearly 1500 clients nationwide. With over $2.5 billion in assets, they’re a group of advisors dedicated to ensuring their clients achieve their investment and retirement goals. And now here's your host Brad Barrett. [00:26.1]

Brad: Welcome to Make your Money Matter, the show dedicated to helping you create a better relationship with your money. I'm your host, Brad Barrett, and it's my goal to help you distill the best ideas when it comes to your finances so you can make more confident money moves. Here at One Capital Management, our mission is simple to help our clients and you listeners take control of your finances and build the life you deserve. Friends, today the challenge is no longer the access to information, but rather it's finding the right information, and more importantly, how that information applies to you. And that's my commitment to you here today on the Make your Money Matter podcast, because after all your money matters and knowing how to plan your financial future is vital to your financial success. And before we get started, if you haven't already done so you can go to our website at onecapitalmanagement.com. You can click on the media tab and there you can download and subscribe the, Make your Money Matter podcast. You can also download the podcast on any platform where you would otherwise download a podcast, whether that's Spotify, SoundCloud, the apple app on your phone or Google podcast. Leave us a review, let us know how we're doing, it's always good to get feedback. And as you heard me say each and every week, if you like the podcast, share it with someone you like, if you don't like the podcast, I guess share it with someone you don't like. But today's an important one because I want to go through something that we see here at the firm. And I've talked to a lot of my colleagues here and we compiled a list of some of the questions that you should and should not ask a financial advisor when you are looking to hire them. [02:08.2]

Now, this is an important concept because here and myself, as an advisor for nearly 20 years, we see a lot of questions and we'd have a lot of prospective client meetings. A lot of those that call in from the podcast, from our radio program, from referrals, from our clients, which we greatly appreciate. You can see that in a given week, we have quite a bit of perspective clients and so we want to help with the questions, whether it's us or another advisor that you should be seeking out and actually asking. And more importantly than that maybe, is not only the questions you should be asking, but the ones you should not be asking. Because if you Google right now, use Google a list, you'll come up with a bunch of topics on what you should ask your financial advisor. And they're really what I'll call two dimensional questions, they don't actually answer anything for you. So, we're going to be discussing that today and through the five, the main five that I've come up with that we're going to go through, I also want to add a little bit about us so you know, a little bit more about how we operate as a firm here at One Capital Management. [03:12.7]

Now it goes without saying that finding the right financial advisor or private wealth advisor takes more thought, then asking the same old questions. So, here's what people are saying that I think we, as a firm, think I want to educate our community where people are going wrong and what they should ask instead. So, as I mentioned before, the five things that people ask a potential advisor and why they may not be the right question. Let me give you an example. I recently had a prospective client that called in from our radio program and the first question they asked me was to send out our form ADV part two. Now, for many of you listening right now, you might be going, what did he just say? That was actually their only question. Now our form ADV part two is the SEC filing, which is essentially a marketing brochure that duplicates the information that you can find on our website. Now we sent it, of course, no problem, we have all of that. But we're certain, I'm certain it didn't really tell much about what we do and how it would or would not match this person's needs. [04:22.1]

Now I suspect, and as I mentioned, a couple of minutes ago that this person did an internet search and probably typed in what to ask a financial advisor and really decided to ask for it based on that reading now, a search like this points out a big problem and what I want to get into today and where my thought around this episode for this week came from. Everyone's reading the same information. People tend to stop at whatever comes up first with the result being that everyone is following the same checklist for finding a financial advisor. In fact, when I was Googling and writing this week's episode, actually found a Kiplinger article that I love is by a lady named Lorraine L. And it's amazing because she hits on the same things I'm going to be talking about. So, I'm going to be referring to her article a little bit as well, because it has a lot of the same questions of what you should ask and what you shouldn't ask. [05:13.3]

Now, back to my prospective client that called in when they did his Google search, unfortunately, this approach doesn't necessarily give him the information that they need to make the best decision, in my opinion. Now we're familiar, I want to be clear, we are familiar with these internet checklists because so many of our prospective clients use them. So 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 add maybe how you should ask that question differently and then a little bit about us. So, number one, starting off with number one, what is your performance track record? Ah, everyone knows this one. What have you earned? What are you going to earn for me? Now, aside from the fact that past performance does not indicate future results, performance is very much tied to, I hate to break it to you, but the choice that both planners and clients make together. A good financial advisor should help you determine your goals and how you will get there. This question also conveys the sense that the client is attempting to beat the market rather than focus on his or her unique situation and the need to ultimately generate retirement income or some investment related goal that really is more of a one-on-one basis of conversation between the advisor and you as the client. [06:36.0]

Now, we understand that nobody wants to hire a so-called advisor who gambles with client's money, but the way to ferret out a lack of philosophy is to learn whether the advisor takes a scientific approach using maybe evidence-based investing versus simply guessing which stocks or funds may outperform other securities. So instead of asking, what is your performance track record? My suggestion will be to ask, what is your investment philosophy and approach to building financial plans? So here at One Capital Management, our investment philosophy is very simple - to build customized tax efficient portfolios, designed to align with our client's unique investment plan to achieve really the investment and legacy goals they are seeking. Our goals-based planning approach serves as the foundation to structure, ultimately a lifetime of aspirational portfolios. Starting with planning first, ultimately before discussing investment related discussions, essentially the planning being the tail that wags the proverbial investment dog. [07:51.2]

If you just sit with someone and talk about their age and their risk tolerance, you're not doing any service for them, nor is it good for you to actually hear that from an advisor, going through a discovery meeting, to understand your goals and objectives and not just the numerical data. I'm talking about the qualitative data, your interests, your hobbies, your relationships, your values, those matter when it comes to building your ultimate investment plan and then executing that plan. [08:19.2]

All right, question number two. How many clients do you have? This question tells you something about an advisor's practice, but what? And how does that actually fit into what you need? Does an advisor have only a handful of clients because all their other clients left or because the practice has a very narrow speciality? 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? So instead of asking how many clients do you have understand what the objective is for you in knowing that answer? So, I think what should ask is what types of clients do you work with? How long does it take to get an appointment? What is your meeting process? And maybe even what are the reasons that people have left your practice? So here at One Capital Management, our typical client ranges. We have advisors solely focused on certain niches. We have an entire practice dedicated to first responders being firemen and police. We have an entire practice dedicated to sports and entertainment. We have an entire practice dedicated, headed up all by advisors themselves who specialize in this in family office approach, in private wealth and in business in retirement planning. So here at our firm, we have a structure so that we have a specialty in the area that would fit you. [09:40.9]

And each of those advisors and their teams are accessible to getting an appointment, having review meetings and ultimately the process, which I think the good sound advice process should be starting with, again, your discovery of who you are as a client and how we can serve you and provide value to you. But then ultimately one of the questions I ask clients, when we engage is how do you want to be served? And I follow that up by saying, do you want me to contact you every month? Every quarter? I have some clients saying, Brad, look, I'm busy. I trust you guys. You've laid out the plan. I understand it. We'll meet once a year and that's good. I have other clients that say, you know, Brad, I'd really love to check in with you once a quarter. Having us know that having a two-way street of communication is vital to helping answer a question that may seem so two-dimensional, as I mentioned, like how many clients do you have? What you're really asking for is do you have time for me? Do you specialize in what I need? And when I call, can I access you? All of which here at our firm, we take very heavily in making sure that all those things are yeses. We can serve your need, you, we are accessible to you, and we'll make sure that when you access us, it's the right thing for you. That's the question when you're looking at an advisor to make sure it works for your life in your planning. [10:56.8]

All right number three, what services do you provide? Now, this is a very generic one as you can see, and the answer to this question should actually match the services you need. Not too dissimilar to what I just mentioned on question number two, or again, the services you need or think you need. So, an advisor who works with let's say just high net worth families, or manages 401k plans, or maybe a “advisor” who sells insurance may not be the best person to help you with a retirement cashflow management plan. So, watch out for small practices that seem to offer like everything under the sun, as they may not actually have the depth of expertise in any of those areas. Now, I honestly see practices that list 30 areas of expertise, many of which require different skills and knowledge. So maybe 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 in the first year. Then I would follow up by asking what network of support do you have to provide all the services that I need? It's likely by the way that no one person you're working with can help with everything from a budget to investing to retirement withdrawals, estate planning, tax planning, you can see how being an advisor it's multifaceted. So, it's important that the person you're working with has access to a backup team if necessary. So, see, what kinds of experts are available to work on your behalf for those areas of need. [12:29.2]

One of the things I've suggested before in our radio program and podcast is to look at an advisor as if you are the head coach or team owner of say a football team. Now bear with me here as I go through my football analogy here, but a good advisor should be your star quarterback. Now you need running knacks, you need wide outs, you need guards to protect the quarterback, but ultimately you are relaying what you want to see happen on the field to progress down the field to your quarterback. And your quarterback will then run the play, will bring in the appropriate players. So here at One Capital Management, we want to be that star quarterback for our clients, providing that value and that feedback from the field. We understand your goals and objectives. And our job is to make sure we move down the field in a concise order and cohesively adjusting to each of the changing items that happens in our life and or on the field. We're going to make sure we involve a CPA, an estate planning attorney, potentially an insurance broker, if needed, and any other items that you may need to fit the goal that you would have in your plan. [13:36.1]

One thing that we don't do here, which is really important to know is we don't hire those specialties in-house. Our approach has always been best practices. I want you to be able to say, if you have a tax need, there are three or four people that I can call that I work with very closely for over 10 years, that I want you to interview each one of them and I'll do it with you, if you'd like to make sure they are the right fit for you and the right team member that you want on your team. Our job is to be able to work with them closely. Same thing for estate planning, attorneys, same thing for anyone else in your life that you want to have. In fact, I have a client I'm meeting with later this week that we are going through their planning about moving from the state of California to Nevada. She's a little bit older, she's a widow. We went through a lot of things I'm meeting with her daughter and her I'm also meeting with her real estate agent because she's selling a home here in California and buying a home in Nevada. So, we are meeting with the real estate agent here along with having on conference call the real estate agent in Nevada, as well as her state planning attorney, because this decision for her being born and raised here for 75 years in California is a big deal. So, we want to make sure we bring the players in that makes sense for that discussion. So again, instead of asking what services do you provide, make sure that the services that provided by the advisor fit your need. And then if you don't know what those needs are, that's the discovery process to make sure that you can understand what the is saying to you and how their approach and their value proposition works for you. [15:07.2]

All right, number four, what credentials do you have? Now the various credentials in the financial services industry require they do require time and study to earn them. They do matter, but I'll be honest with you they don't tell the entire story. The certified financial planner designation, which I happen to have, is increasingly common in the industry and many firms have at least one CFP on staff, we happen to have a couple. Now, however, I want to say this very clearly and again, this is speaking from a CFP professional. We want to use caution when assuming that all CFPs are experts in every financial situation, not all of those who hold a CFP have actually a comprehensive planning experience. Some work, believe it or not as insurance agents or stock brokers, or even journalists who have CFP designations, not with people necessarily like you. Now for myself, I didn't get my CFP till about four years ago, which is about 12 years after I was in the industry. I wanted experience. Personally, I feel that having an advisor who's been there, who's seen that who's gone through those approaches in the investing world, in the planning world, the tax arena, the estate planning arena that is a big deal than just the letters they have behind their name. [16:25.3]

Now others in the industry have lots and lots of credentials, but that could be because they actually like taking classes more than doing the work of an advisor. Something to just consider. You should look for credentials. No doubt, that's a good thing, but experience to help you meet your needs, I think is more important than a string of letters after someone's name. So, you can probably see where I'm going with this one. Instead of asking what credentials have you earned? What experience do you have in helping investors like me should really be the question. And or how long have you been giving advice to clients with maybe my specific needs? Those I think are better questions to help answer what the intended goal of that question is for you. [17:07.9]

All right number five. And this is not in any order of importance because number five is become probably the most notable word in the financial industry is in the past 10 years. And the question is, are you a fiduciary? Now to be fair, this is a loaded question. Many advisors have both fiduciary and non-fiduciary roles, depending on the situation. The securities and exchange commission says that anyone who collects a commission is not a fiduciary. However, some advisors do actually use commission-based products with some clients, but not others, depending on the situation. At our firm, we've actually run across several of these hybrid advisors who tout only the fiduciary role, which can really mislead clients. So, one thing I want to say about our firm is we are a fiduciary. And here's the funny thing about that. I don't mean to make light of this. But when the DOL, the Department of Labor came out with these best interest of client’s regulations I'll say we kind of sat back as partners here kind of almost giggling, which is not a really a great thing to say, but I'm being honest here and saying that that's what we've done since the inception of our firm in 2001. Essentially what the DOL and the SEC wants to have happen is that the advisors work on behalf of the client. They are on the same side as the client in all matters. And to us, that's inherent in who we are. [18:28.6]

Now, we also do not receive commissions on any security transactions, nor do we receive commissions from third party investment companies. We are fiduciaries always acting in your best interest. So, it is an important question. Don't get me wrong, but I want people to understand what fiduciary actually means. Understanding how their pay structure is involved, actually matters. The compensation is really where that question lies. Are you on my side? Am I going to understand your fee structure and know that you're not going to sell me something just because you get a commission that's the question that really is most important when you are interviewing a financial advisor. Now on the topic of compensation, all advisors receive some form of competition for their services. So again, a better question though, is to ask, how the advisor is compensated? If you know that up front, you'll have a better sense of whether the advice you receive matches the price you pay and how that sits with you. Because again, just to be open our firm, we don't charge or get paid commissions on security related transactions or third-party investment companies. We want to act for you always. We get paid to manage assets and to advise our clients. And we are upfront about that in our investment policy statement in our ADVs, you will hear all of this as we go through your plan. [19:53.0]

So, of the five questions I brought up of, what are the common questions asked when it comes to seeking a financial advisor? You know, what is your performance track record? How many clients do you have? What services do you provide? What credentials have you earned? And are you a fiduciary? All five are good questions, but I wanted to today go through how we should ask those a little differently just so you know that you are filtering that question to make sure the answer comes to fit into your world. So, it's not just some two-dimensional question it's actually dynamic for you. It actually makes sense. Okay, that works for me, that doesn't. The financial services industry in my opinion, is better off, when clients ask good questions, we want to help you or refer you to someone who can better meet your needs if it's not us. One way as what I want to do today is for you to understand what you're asking and how it ties to what you need to know. I think this is a far better approach than maybe using a standardized internet checklist. [20:58.5]

So, I hope today's episode around the five questions you should, and maybe should not ask a financial advisor that you are seeking. But if you haven't had that counsel, you hadn't had that first meeting with an advisor and you'd like to call us, give us a call. You can call us at (805) 409-8150. You can also go on our website at onecapitalmanagement.com. You can find out more about our firm. You can actually set a meeting with myself or any one of our advisors to find that need that specialty that works for you. [21:29.8]

Thank you for listening to make your money matter before acting on anything discussed today, remember speak with a financial advisor near you, and if you're not sure where to turn and you'd like our help visit us at onecapitalmanagement.com for a complimentary retirement track review, or give us a call (805) 409-8150. And until next week always remember make your money matter. [21:53.4]

The information in this podcast is educational and general in nature and does not take into consideration the listener's 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. [22:16.4]