What Women Want in a Financial Advisor – And How to Find a Good One

Scenario: Couple in their 30's start to invest for a more secure future. DH chooses the advisors and companies, based on his contacts and friends. DH dies in his 40's, leaving his spouse to manage all the family assets. Spouse quickly realizes she doesn't much care for the advisers he chose to work with. IMO, they were generally patronizing, or just didn't realize our entire situation. Therefore, I started choosing new investments and advisors with whom I felt comfortable, only later to discover that some of them also took advantage of the situation and my own naivety.
So......my advice after going through this is: Choose advisors you are BOTH comfortable working with and you can BOTH understand and talk with. They should be able to answer all your questions without making you feel inferior. I think some men don't want to appear ignorant, therefore they act like they understand what the advisor is recommending, even when they really do not. Sorry guys.....I don't know how else to explain the reason for some of the decisions. My masculinity isn't at stake, so I really don't care what anyone may think of me. Some people just don't work well together. Seek out those with whom you BOTH can work well, because you may wind up having to work by yourself.

Caps - Very good points. I agree with you completely.

I'm a professional, but look kinda grandmotherly LOL. I find that many investment advisors start out acting like I'm a dumb little woman who should just trust them. I do keep a chunk of money in cash, for personal reasons. I've interviewed 2-3 investment advisors over the last two years, and they've been very anxious to invest it despite my personal reasons for remaining liquid.

The financial planners and investments advisors that I've met don't know that my spouse had been an investment advisor, so I got to see the "inside" scoop on how a few of the big investment houses operate -- for example, daily calls telling staff which investments to push on their investors that day with tidbits of information about the investment (makes it sound as if the advisor has done his/her own research), bonuses for pushing particular funds, annuities, or referrals to their LTC or insurance arms, and the use of software that does all the thinking. Even when someone says that their service isn't fee-based, that might not be true. They might not get a fee from your investment, but there could be a bonus at the end of the year tied to investments in particular products, or the company itself may push particular products because it has a fee arrangement with a fund family or investment product that benefits the company or its larger clients. I got to meet my spouse's peers, and learned that the majority of them had no special training in accounting, tax, financial planning or other financial management skills (other than the company's own training programs for licensing and sales). I was amazed to learn that the most successful financial planner in my spouse's office had been a used car salesman before switching careers ("Sales are sales, right?"). Among other questions, now I ask for a resume when someone wants to work with me. There are enough planners out there, that we can be selective. For references, I want to hear from someone who has been with their advisor for a few years...ideally through up and down markets, not just our recent up market when a chimp could make money.

The best advisor I've found is actually my personal banker at my local branch bank. He dutifully referred me to their financial planning group when my assets reached a certain number. That financial planner was a jerk, and a total waste of my time. The bank's financial planner fell into every bad category (patronizing, heavy reliance on software, lack of good money-management credentials, and pushing categories of products that I knew were fee-laden even though he said that his own service was not fee-based). My personal banker, on the other hand, is a career banker who is willing to spend time to discuss my investments and talk about his personal perspective on them. He isn't actually providing financial planning, but he provides me with great common sense, helpful ideas, and doesn't rush me when we meet. I'm not sure how you find someone like this who you can trust to assist with self-management of your monies, except by listening to anyone who seems to know what they're doing, and figuring out for your self if their ideas are sound or not.

Sharon,
You have much more of the inside scoop on investment firms, so i won't add too much. What i do want to add is that your advisor should have an appropriate degree, such as Certified Financial Planner (CFP). There may be others as well. This is no guarantee as a person can get this degree with their sole motivation to 'make lots of money.' However, it is a long, arduous road; and many persons with CFP degrees are committed to the personal finances of their clients. There are ethic courses, etc. That said, at the very worst, this person knows a heck of a lot more than an investment 'salesperson'.

Sorry, i didn't mean to say "your" financial advisor in my response to Sharon. I meant to say "a" financial advisor; meaning anyone's advisor.

After more than 30 yrs in the financial services business, my only recommendation to friends and family is to seek out a "Registered Investment Advisor" who only operates under "fiduciary rules". The above conversation simply ignores this very important distinction. An advisor operating as a fiduciary has the legal obligation to act in the clients best interests. Period!
I recommend you get this in writing and store this document carefully. Most bankers, wirehouse advisors, insurance agents, regardless of credentials do not usually operate under fiduciary rules. Instead, their standard is a much lower obligation of suitability. Let's say a financial advisor prescribes an asset allocation for your portfolio, if he operates under suitability rules, you will probably have a recommended list of investments that his firm offers, usually expensively active managed mutual funds costing around 1 % not including the firms fees. A fiduciary's prescribed asset allocation will usually recommend low cost index funds and index ETFs. Why, because the average active equity fund management does not even beat their respective indexes before taxes and fees.
See this : https://us.spindices.com/documents/spiva/spiva-us-mid-year-2014.pdf?force_download=true
And this is just one issue that highlights the conflict of interests that permeate the financial services industry. That's why I recommend a Registered Investment Advisor operating under fiduciary rules.

Great advice Caps and Sharon!

I have been with my advisor for 5-6 years. My town is small so the choices are slim. That is both a good and bad thing. A bad advisor in a small town won't last but the really outstanding one may choose to live in a larger market. I interviewed a few advisors and decided on the one that:

1. Explained things in English.
2. Respected my personal goals even when they did not fit conventional wisdom. I.e. wanted a low interest mortgage paid off before retirement.
3. Did not give the high sales pitch. I.e. asked me if and how much I want to invest monthly.
4. Discussed the recommended funds well.

I've had 3 different financial planners, each invested my money and I never heard from them after. Only staying with these people for a few years each, I learned to analyze the mutual funds myself through Morningstar. Now there is much more information on mutual funds available on the web. Five years ago I tried another financial advisor which I really like. These are the reasons:

They are a fiduciary, which is very important. A fiduciary duty is the highest standard of care at either equity or law. http://en.wikipedia.org/wiki/Fiduciary

They have a team approach. Each member is very intelligent in investments.

Every meeting is held with at least two advisors and they encourage a meeting every 6-12 months. If I don't call them for an annual meeting. They will call me.

My questions are answered in depth without bias and without pressure. They will go over the economic climate outlook if I want without rushing me out the door. No mention (unless asked for) or pressure is put on buying any other services.

All emails are answered in a timely manor.

The fee is based on the amount of money invested. Without incentives from vendors.

The money is invested through a large well known brokerage firm, so there isn't any money going directly through their hands. No Ponzi scheme.

They move my money around quite a bit, to follow the global economy.

They stick with a percentage of risk according to my wishes.

This company is currently on our local radio with their objective views on the global economic and financial outlook without the opinionated preaching and bullying they do on the Fox network. Listening to them is a plus because I can always tune in and hear what they are thinking about in terms of the financial climate. And they have to be knowledgeable on the latest developments because of the radio program.

Not many advisors have a radio program, but if you can get and advisor with most of the points I describe above, you will be a step ahead of most people.

When I retired (early out), I needed to roll my 401k so went with someone I knew at Smith Barney. Wasn't satisfied so moved to a friend with Wells Fargo but suspected the advice to buy was driven by the boss and I again needed to find someone else. Had met a neighbor who had worked for a national iinsurance organization and didn't like having to "sell" to clients and really wished to give service to clients. He is fee based (he makes money when I make money) so I moved all to his care and have never looked back. He is in the Sacramento area yet has clients in several different states. A friend of mine in Colorado signed up with him and he visits her there. One time, he was going to Colorado to see her but she had to finish a home project and wasn't sure she'd have time to meet so he brought his jeans and helped her with her project. Feel very comfortable with Bob and would recommend him to anyone looking for a trust worthy adviser.

Thanks admin for following up...as always great advice from the article and from the comments. I especially found the info about fiduciary rules interesting. I think this is great as one gets older and if your advisor sees you making some questionable decisions! That is also something to think about.

Do most of you feel it is preferable to have a financial advisor in your general location?

I know that some are national and some are more limited in location. My question is about state taxes. Although I do not expect my financial advisor to act as a CPA, but it is helpful to consider the tax implication of financial decisions. For example, many states consider capital gains as ordinary income.

I found my fee based financial advisor by taking a couple week night class on budgeting for retirement. I pretty much knew what to expect as far as bills and income but I needed to make sure I got it all. I don't think too highly of the annuities and such so I wanted to hear the pros and the cons. The teacher/advisor spoke in a way for me to understand him. The perk of his class was a financial plan created by him based on my goals, assets, liabilities, etc. After several years of checking in w/him, I retired a little sooner than planned but is has worked out. Also, since I know that cost of living is going up by leaps and bounds in my area, I didn't want to be financially unable to leave if I waited too long. I am currently in the process of selling my house in Vancouver WA and moving to my dream home in TN. He is fee based and makes money when I make money which makes both of us happy.

Hi Maureen,
Since we plan to snowbird in TN in about a week from now....... We are curious what town/city you have found and where your financial person resides?
Thanks

Elaine: I think you make a good point. I've met CPAs who are also financial advisors, but their fees are much higher because they provide two services. Otherwise, I've only met financial planners who have information about the taxability of bonds etc., but who don't analyze personal tax situations such as whether something will trigger the Alternative Minimum Tax. My spouse's wealthiest clients had accountants and financial planners work as a team, to strategize together on everything from timing of buys-sells to portfolio balancing. Personally, I just play with my tax software when considering an investment change that could have tax ramifications. It's not as ideal as paying an accountant, but it has worked for me so far. I tried to get one of my kids to be an accountant, but failed :-).

This is some really great information on finding a financial advisor. I know I'm a little intimidated by the retirement process so planning accordingly is difficult. Finding someone that you can trust will help that process be a little less stressful and complex. Thanks for sharing this.