Friday, April 7, 2023

Finding a Financial Advisor

After reading yet another article on how to find a good financial advisor, I was struck by how useless the advice is for most people.  The problem is that how you should proceed depends on your income and net worth.  There is no one-size-fits-all solution.

Let’s consider a couple of examples to illustrate what I mean.

Case 1:
  Meet Amy.  She’s in her 30s, earns $65,000 per year, and has $10,000 saved.  She’s learned that how she invests can make a big difference in how much money she will have saved by the time she retires.  She knows she needs good advice and would like to find a financial advisor.  She’s also read that it’s best to find a fiduciary.

How should Amy proceed?  To start, Amy should get some hockey equipment to protect her body from all the doors that will slam in her face.  She is nowhere close to the type of client fiduciaries want.

Case 2:
Susan is in her early 60s, earns $800,000 per year, and has $10 million saved.  She is looking for other options than her big bank’s wealth services arm.

Susan should hire a bodyguard to protect her from the onslaught of financial advisors fighting their way to the front of the line to pitch their services to her.

The main takeaway here is if you’re looking for advice on how to find a good financial advisor, ignore advice where you can’t tell if it’s intended for those at your level of income or net worth.

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