Most times in life we seek to spend time with people we like and who agree with our views on major topics. However, this may not be a good strategy when it comes to financial advisors as Jason Zweig explains.
Here is a rough transcript of a common exchange I have with people about their financial advisors:
Me: “Are you happy with your financial advisor?”
Reply: “Yes, he’s a really great guy.”
Me: “Is he handling your money well?”
Reply: “Uh, I don’t really understand that stuff very well. But he’s really a good guy.”
A sign of a good salesperson is being likeable. Things aren’t much different with financial advisors. The advisors who are hungry for business do well by agreeing with whatever the client says, even if the client thinks he want to manage his money in a way that isn’t likely to perform well.
This brings me to a potential strategy for choosing a financial advisor. Seek out an advisor who disagrees with you. The theory is that such an advisor is more likely to be looking out for your interests even if it might cost him some business.
I don’t know if finding a disagreeable financial advisor is the best strategy, but it certainly makes sense to be wary of those who agree with you too much.