Who, What, When, Where and Why? How to Interview and Rate Your Advisor

Paladin Registry recommends a 5-step process to finding the best financial advisor, and the last step may be the most intimidating: Interview and rate your advisor.

However, it doesn’t have to be.

Here are 5 things to remember:

  • You have to control the agenda so advisors provide the same information.
  • Advisors who try to control the agenda should be automatically excluded.
  • You have to minimize the impact of advisor sales skills and personalities.
  • You should have all the information you need to select the two finalists.
  • The interview is your last step – it determines the winner.

As you might imagine, the interview is the most dangerous step in your advisor selection process. This is the step where you have the greatest exposure to the advisor’s sales and relationship skills.

You want to select the best advisor; the advisor wants to sell you financial advice, services and products. You make better decisions when you minimize the impact of an advisor’s sales skills.

The good news is that you should have done your homework in advance. Since you control who you interview, you should only be talking to advisors who scored well when you researched their credentials, ethics, business practices and services.

Your biggest challenge in this step is to maintain your objectivity while you gather additional information in the interview phase of your selection process. You want to select the best financial advisor and not the advisor with the best personality or sales skills.

Subjectivity should only enter into your decision when you are down to two finalists who have comparable qualifications. Then and only then should you use your intuition to select the one you would most like to work with. This should not be a major risk if you have followed the proper researching steps.

Think of the interviews as your opportunity to fill in the blanks. For example:

  • Obtain information that was not published on the Internet.
  • Verify information that you found on the Internet.
  • Request clarification for any confusing information.
  • Evaluate the advisors’ communication skills.
  • Ask for documentation for key information.

Your research should have already provided answers to most of the questions you should be asking advisors.

How Many Interviews Should I Conduct?

There are three answers to this question.

Because you want high-quality choices when you interview financial advisors, you should interview at least three or four advisors who successfully completed your research process.

You should also interview the best advisors twice. Your goal for the initial interviews is to narrow your choice to the finalists. Then you should schedule a second interview with them to check first impressions and ask additional questions.

You may want to meet with the finalist one more time to finalize details, review his or her service agreement and discuss next steps.

Where Should I Conduct My Interviews

The advisors’ offices are usually the best place to hold your interviews. However, this isn’t always possible.

You are seeking the best financial advisor, not the closest financial advisor.

If it’s a good fit, you could also interview virtual advisors. Some provide the same services as traditional advisors, but the interviews will be by telephone or a video chat service such as Skype. This type of interview can include a video tour of the advisor’s offices and introductions to the advisor’s staff.

How Long Should My Interviews Be?

You want to create a level playing field for your candidates, so each advisor should be allocated the same amount of time for an interview. We recommend 75 minutes:

  • Spend the first 15 minutes discussing your situation, service requirements and goals. The advisor also has the opportunity to ask questions.
  • Spend the next 45 minutes getting information from the advisor that is requested in your agenda.
  • Spend the final 15 minutes asking any additional questions that occurred to you during the advisor’s presentation.

An hour and 15 minutes may seem like an odd amount of time, but it also tells the advisors you are serious about the amount of time each one has to provide the information you are seeking.

How Do I Control the Interview?

There is only one way to control an interview and that is to provide each advisor with an agenda that describes the information you want covered. Then you must have the discipline to require advisors to follow the agenda.

Many advisors will attempt to deviate from the agenda. They are used to controlling interviews with their sales skills. In fact, most advisors call interviews sales presentations.

Any advisor who fails to follow the agenda should be automatically excluded from your search. The advisor did not respect your requirements for the interview.

Your agenda should focus on information that was not available in your research of the advisors’ websites, regulatory agencies, third-party profiles and Google name searches. Think of this as the non-public data that you would like to know. You may also want to validate information that you uncovered during the research phase. For example, you want to make sure you know who the advisor works for – himself, an RIA, a broker-dealer, a bank or an insurance company.

We recommend you require all advisors to document their responses in writing.

Remember, there shouldn’t be any sensitive questions when your future financial security is impacted by the advisor’s responses. Advisors may ask you a lot of personal questions about your finances, health, profession and retirement. You should feel equally comfortable asking personal questions that impact your selection decision. Advisors can always decline to answer a particular question.

Remember to also ask about compensation. This is a critical, because it helps establish your expectations for that advisor. For example, an advisor whose only method of compensation is commissions is a salesperson. Therefore, you should expect to be sold investment and insurance products.

What Specific Questions Should I Ask?

These questions can tell you a lot about an advisor:

  • Am I a big or small client for you?
  • Who is my principal contact? You? An associate?
  • How often will we communicate?
  • How will we communicate? Reports, meetings, calls?
  • How accessible are you in an urgent situation?
  • Do you provide services to individuals, institutions or both?
  • Who is the backup if my key contact is not available?
  • What rate of return should I expect if I select you as my advisor?
  • Why should I select you or your firm?

Documentation, Documentation, Documentation

Interviews, by their very nature, are verbal but that does not mean the advisor should not document his verbal representations.

Any performance information that is provided by an advisor or reference must be documented. Any advisor who provides verbal performance numbers during an interview should be automatically excluded from your selection process.

Remember, if everything is verbal, you have no record of what was said to you.

For more information on Paladin’s 5-step process, read our newest book, “5 Steps for Selecting the Best Financial Advisor: How the Internet has Changed the Game for Investors and Financial Advisors,” released on April 23. It’s a must-read for investors and will help you protect yourself and your financial future.

Jack Waymire worked in the financial services industry for 28 years before he left to found the Paladin Registry (www.PaladinRegistry.com) in 2004. This investor education website was based on the Principles in Jack’s first book: “Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor.” 
The Registry also has a free service that matches investors to advisors who meet Paladin’s minimum requirements for competence and trustworthiness.

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