by Jack Waymire
Many of the best financial advisors are located in major cities. Millions of investors, who use the services of financial advisors, are located in smaller cities. Does this mean investors in smaller cities do not have access to the best financial advisors?
I have four caveats.
1. The best advisors are very busy professionals. Their primary asset is their time. Therefore, they factor in revenue, time, and expense when they determine how they communicate with you: Face-to-Face, teleconference, or Internet. The more time and expense you represent, the more revenue they need to offset them.
2. You should be seeking the best advisor, not the closest advisor. Selecting an advisor, based on location, could cost you hundreds of thousands of dollars during your lifetime. It is much more important to select the best financial advisor and negotiate an acceptable service strategy (meetings, teleconference, Internet) than it is to limit yourself to the closest advisor.
3. You will have a difficult time finding high quality financial advisors in a smaller city. Most of the “advisors” in smaller cites are not really advisors. They are sales reps who masquerade as financial advisors to reduce sales resistance and facilitate sales. Based on Paladin Registry surveys, we concluded reps in smaller cities need commission income from the sale of investment and insurance products to meet their income requirements. The best financial advisors are not salesmen.
4. We are talking about service meetings at the end of calendar quarters and communications between regularly scheduled meetings. You should negotiate a service meeting strategy after you have selected the best financial advisor who is available to you.
Advisor Accessibility is Key
PaladinRegistry.com has surveyed thousands of investors to find-out why they think they need local advisors. Their #1 response was accessibility. They felt more comfortable if they could jump in the car and go see their advisor.
- 83% of investors acknowledged they called their advisors if they had an immediate question or a concern.
- 41% said they emailed questions to their advisors so they had written records of the advisors’ responses.
Very few investors jumped in the car.
How About Your Location?
The advisor has to meet your meeting expectations and you have to make the numbers (revenue, expense, time) work for the advisor. For example, most advisors are willing to meet at your location one to four times per year if the numbers are right.
How About the Financial Advisor’s Location?
Perhaps once or twice a year you meet at the advisor’s location. There is a good chance, if the advisor is located in a major city, that you will be visiting the city anyway. Include a meeting with your advisor while you are in the bigger city.
Alternative Methods of Communication
Do not limit yourself to face-to-face meetings. You may be used to meeting with advisors face-to-face, but it is out-of-date and inefficient for you and the advisor. Perhaps you meet face-to-face once or twice a year. If you adopt this strategy advisor location becomes less and less important.
Consider alternative methods of communication that provide the information you need. Email your advisor an agenda and conduct the meeting on the telephone. Or, use video conference for face-to-face and electronic communications. You should also have electronic access to all of the data that impacts the investment of your assets.
Maximize Your Objectivity
There is a hidden benefit when you limit your communications to teleconference, video conference, or Internet. You will increase your objectivity by reducing the impact of advisor personalities and sales skills. You will be more focused on information that matters: investment performance, investment expenses, risk exposure and other financial data.
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