Five Tips for Interviewing Financial Advisors

Investors interview multiple financial advisors with a goal of selecting the best financial advisor. However, financial advisors are skilled at telling investors what they want to hear and omitting information that may cause investors to reject them. But, they have to control the interview process to make this happen. Consequently “The Financial Advisor Interview” is a very dangerous process that may cause investors to select weak advisors who happen to have the best sales skills.

Up until now, investors have been on their own to develop processes for interviewing financial advisors, which is why they do not have one. Paladin Research & Registry recently announced a free solution for investors. They can use Paladin’s Request for Information to gather data from financial advisors, Paladin’s Advisor Scorecard to compare advisors to each other, Paladin’s quality ratings to select the best advisors for interviews, and Paladin’s archiving service to store advisor responses.

Investors, who are Paladin Users, also have access to a free Guide that puts them in control of the interview process. Following are five tips for interviewing financial advisors.

1. Who is in Control?

Financial advisors want to control the interview so they can control the information you will rely on to make your selection decision. On the other hand, you should be in control so you get factual information that helps you make the right decisions. If you are going to control the interview you must have a process that is used by all of the professionals who are competing to be your advisor.

2. Minimize the Impact of Sales Pitches

Advisors use finally honed sales pitches to convince you to buy what they are selling. Unfortunately, sales skills have nothing to do with competence or ethics. In fact, sales skills can be used to tell you what you want to hear, omit key information that describes weaknesses, and misrepresent information so advisors appear to be more knowledgeable than they really are.

3. Minimize the Impact of Personalities

Financial advisors want you to like them. In fact, there are specific sales tactics that are designed to get you to like advisors, for example rapport building and relationship development. Unfortunately, personalities have nothing to do with competence or ethics. In fact, personalities can cause you to select the wrong advisor for the wrong reason. Therefore, your interview process must minimize the impact of financial advisor personalities.

4. Credentials, Ethics, Business Practices 

Advisors do not have track records or mandatory disclosure requirements. It is up to you to obtain the information you need to measure their competence and ethical histories. For example, their education, years of experience, certifications, compliance records, methods of compensation, and services. These facts help you make the right decision for the right reasons.

5. Trust What You See

Nothing could be truer than the old saying: “Trust what you see, not what you hear”. When you interview advisors documented information is way more accurate than verbal information. When information is verbal, you have no written record, and it is your word against the advisor. You will lose if you do not have documentation.

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