Let’s imagine you’re a high-net-worth (HNW) business owner in the market for a new wealth adviser. Let’s also imagine you’ve created a short list of three to four prospective choices based on referrals from other financial professionals you work with, word-of-mouth from peers or maybe even based on the reputation of a particular firm.
How do you select the one that’s right for you?
One of the most effective ways to select a wealth adviser is to base your decision on his or her professional experience. There’s only one problem: assessing the quantity and quality of that experience can be difficult. When your prospective choice says he or she has “20 years” of experience, what does that mean? Experience doing what? With whom? And most importantly: how successful was that experience?
To that end, here are a few questions to assess the depth and breadth of an adviser’s experience.
1. How many of your clients are high-net-worth individuals? Why do you like working with this type of clientele?
Anyone can call himself an “HNW specialist.” Whether the person deserves that label is another issue. By asking how many HNW individuals the person works with, you’ll know immediately whether you’re dealing with a specialist or a wannabe. And by asking why he or she has chosen to work with HNW individuals, you’ll get a sense of motivation. Experienced advisers will talk about the challenge of working with people with complex financial issues. That shows that they’re not blinded by the dollars or the “prestige” of working with wealthy people; they know that it takes a lot of hard work.
2. Tell me about a client success story.
Ask your adviser prospects about a financial problem they’ve solved for a client. Ask for details about the process taken to solve the problem, as well as the result of their work: how has the client’s position changed? Experienced advisers will give you an indication that there’s a steady hand at the wheel, capable of analyzing a challenge facing a client and proposing a suitable course of action. A good adviser should also be able to explain things clearly and cogently in a language that makes sense, without dumbing things down.
3. What have you learned over the years?
There are no right answers to this question. Everyone takes away something different from his or her professional life. But the experienced adviser will explain that working with clients is like receiving an ongoing education. No two days are alike, and that’s part of the joy of working in this business. The best advisers are the ones who learn from their experiences and apply that experience to every client’s portfolio.
4. Can I see a sample portfolio?
Serious advisers will be prepared to show you a sample of their work, with names and other confidential information blacked out, of course. When you receive it, ask some questions: why is this or that investment in the portfolio? What does it do for a client? How did the adviser select it? The answer will give you a good idea of how much experience the individual has with investment selection or whether he or she simply delegates that to other team members.