13 Ways Your Financial Advisor Should Be Like Your Doctor
It’s a routine visit – your blood pressure, height/weight, and general health questions. Doctor comes in and spends a minute going over things. You mention a strange pain in your side. He tells you to eat healthier and exercise to lose a few pounds. You leave with a prescription for pain relief and cholesterol.
So everything is good… right? Despite the medication, you still have a nagging feeling wondering why there was pain in the first place. Is it really treated?
Whether they see it or not, there are hundreds of thousands of people receiving the same style of advice for their finances.
Could you be one of them?
In the same way you’d seek out a second opinion with a serious illness, your long-term finances and retirement are part of the most serious decisions you can make in life. Getting a second opinion can be lifechanging.
The following similarities between excellent medical professionals and excellent financial professionals will help you determine who to work with to get a second opinion that can drastically change the trajectory of your financial life and retirement.
- A team of doctors. Instead of just one professional, a team of doctors has many more years of experience and multiple eyes to ensure the best treatment options. A team of advisors does the same thing but with one added benefit. In addition to expertise and experience, there are also younger advisors that will see your plan through for 20, 30, 40 years without retiring before you.
- A doctor who isn’t free. If your doctor was giving free advice and treatment, would you be thinking “Is he doing a thorough job or just skimming the surface to hook me? What’s the catch?” It should be the same with a second opinion. If an advisor will do work for free, they have a motive on the back end to make their money. Work with someone who will do quality work for a reasonable price.
- Specialists are critical. Would you consult a family doctor if you needed a cardiologist? Would you consult an insurance salesman for retirement? Without an exception, work with advisors who had to pass rigorous training and experience requirements specific to your situation – Certified Financial Planner™ (CFP®) Professionals are fully qualified to analyze all aspects specific to your life and provide you with the best solution to your issues.
- A doctor who would treat his own symptoms the same way. “That’s what I would do for myself in this situation.” Your confidence in retirement and investments should be bulletproof. If your advisor is investing their personal money the same way they suggest to you, that’s confidence.
- A medical measurable result. Curing your condition is obvious – no more pain, no more discomfort, no more doubt. Your second opinion needs to address measurable benchmarks. Tangible and intangible ones. Tangible: “If you are able to save $200 a month in taxes, that means $19,200 in your pocket over 8 years.” Intangible: “Even in poor market conditions, you don’t question your strategy.”
- A treatment plan customized to your symptoms. Doctors know a whole treatment plan is much more effective than just prescribing medicine. If your financial second opinion only centers around your investments, that’s just talking about the medicine. A second opinion should address every single aspect of your life that deals with money. If you don’t address the whole picture, are you really ready for retirement?
- Doctor who gives you best case and worst case scenario. You want to know the potential outcomes. Likewise, in the financial world, what can you expect? If the market goes on average, how will your retirement look? What if the market is poor? What about a worst case scenario? A second opinion that addresses all of these scenarios has the potential to improve your confidence ten-fold.
- Translating medical language to understand conditions easily. Your doctor won’t say you have a “contusion, or ecchymosis,” they will be straightforward and say you have a bruise. Financial language can also be daunting. It takes a lot more effort to create a concise, easy to read, and easy to implement second opinion. Ensure yours is able to make concepts such as retirement, taxes, health insurance, social security, long term care, and investments easy to understand. As an added bonus, ensure your plan isn’t a binder filled with charts and graphs that you’ll never fully understand. A good plan may have 10-15 pages of actionable items. Charts and graphs are great, but if you don’t understand them, they won’t mean anything.
- A doctor who provides nutritional advice. They understand that there are many other variables surrounding your health. An advisor who provides a tax efficiency review can be worth a few hundred to a few thousand dollars in the near term, with long term tax strategies that can be worth $100,000+.
- A specialist who spends their time working with similar cases. By doing that, they can hone their skills and see the nuances of similar cases. Financial advisors are able to do the same by having a minimum – whether it’s income based (ex. Family income of $200,000 to $1.2M), or asset based ($750,000 account minimum with a max of $10M), these items ensure the advisor is working with clients in similar situations. They are concentrating on how best to provide the most value for their target market.
- Not getting paid under the table for treatment recommendations. Why do pharmaceutical sales reps exist? To have doctors prescribe their medications. Would you want your doctor prescribing you a medication mainly because a sales rep suggested it? To ensure your financial second opinion is in your best interest, look out for the following terms: Fiduciary and Fee-based. A Fiduciary has a legal obligation to put your interests first, and fee-based advisors don’t pick investments based on the ones that pay the highest commissions, they are compensated by you directly, eliminating conflicts of interest.
- Adept at cutting edge and proven technologies. There is no magic pill for weight loss, to get rid of cancer, or to suddenly make you forever happy. Ensure your financial second opinion doesn’t peddle the “latest and greatest” magic pill that solves all of your problems. They should be using new, cutting edge computer analyses coupled with proven technologies and investments that have provided security and confidence for retirees of all ages.
- Free Consulation. During a free consultation, a doctor assesses your condition and then gives an overview of a treatment plan. Look for an advisor who doesn’t use their free consultation as a sales pitch, but as a way to understand your “financial symptoms”. They ask good questions and make sure you do the talking. In the end, they should provide an overview of what they believe would help you out the most.
You wouldn’t wait to get a medical second opinion when it can literally mean the difference between life and death. Get your financial second opinion going now to drastically change the trajectory of your financial life and retirement.