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What Should You Look For in a Financial Advisor? (Part 2) – Episode 12

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Finding the right financial advisor to manage your wealth is so important that the Dentist Money Show™ has dedicated two episodes to discussing the questions you should ask – and the answers you should get – when hiring an advisor. In this episode (Part 2), Reese and Ryan continue the conversation about how to identify the best advisor to help you retire faster and better.

Podcast Transcription:

Speaker: This is Dentist Money. Now, here is your host, Reese Harper.

Reese Harper: Welcome to the Dentist Money show, where we help dentists make smart financial decisions. I am your host, Reese harper, here with my co-host, Dr. Ryan Isaac. Disclaimer: he is NOT a doctor.

Ryan Isaac: Wish I was Ortho, two locations. Well, this is part two, we are talking about how to choose a financial advisor. Ten questions to ask a potential financial advisor.

Reese Harper: Part B! If you haven’t listened to Part A, go back and do that now.

Ryan Isaac: Ya, and rate it highly! Read the article. In part one we talked about four questions out of ten that you want to ask before hiring a financial advisor. We are trying to stress the point that this is one of the biggest decisions you will ever make and it has a huge impact on your future. So do your research and be aware that cognitive biases could play into effect here.

Reese Harper: Picking a financial advisor is one of the most important decisions that you will ever make and we are going to jump right into part two.

Ryan Isaac: This is question number five, if we are continuing, this is a question you would like to ask a potential financial advisor. What happens to me, if something happens to you?

Reese Harper: Good questions, a lot of people don’t have…

Ryan Isaac: Well, sorry, the first thing that comes to my mind is that the average financial advisor in our industry is in their mid 50’s. When we go to conferences, we look like the errand boys.

Reese Harper: Ya, it is a field that has an older average age, similar to dentistry in that aspect. There is much more demand for new dentists than for financial advisors. There are not as many people coming into the field and there is a lot of turnover. So it is a fair question.

Ryan Isaac: Ya, so a lot of guys are working with someone who is older than them or who is retiring. It is important for every financial advisor to have some kind of transition plan. Usually what you will find is that the transition plan is that I will work less and I hope you won’t notice.

Reese Harper: I will just answer your call less frequently.

Ryan Isaac: We will golf together instead of doing anything.

Reese Harper: Send a Christmas card.

Reese Harper: It is something that you need to be aware of, and if something happened that was super unexpected the question is who internally knows your situation well enough or follows a similar methodology or process that can access your information. In my opinion, financial advisors that work alone with an assistant are kind of in a silo.

Ryan Isaac: There is a high percentage of people in our industry in that business model.

Reese Harper: Yes, very common to see someone working out of a silo office with no transition plan.

Ryan Isaac: And if they do have partner, usually they are just kind of doing their own thing even if they are in the same firm. What comes to mind for me, and it is not that common in our industry, but if you can find someone to work with that has the process delivers the value more than just the person. All of the knowledge and the stuff that they are doing for you isn’t just in the guy’s head but it is an actual process that is followed that could be replicated by another guy, that would be helpful.

Reese Harper: If he can get it to the point where it is documented well enough for someone else to follow, then I think good firms do that. But make sure that you are working with someone who has thought through that enough because it will happen at some point. You will have to transition or something may happen to the advisor that makes it just impossible for him to continue working or change careers. You are investing a lot in that relationship, make sure there is a way for the value to transfer.

Ryan Isaac: Question number 6, what is your educational background?

Reese Harper: This is a really interesting one. Our industry is notorious for basically creating its own credentials and self titling geniuses. I think there are like 100 credentials.

Ryan Isaac: Meaning, they will have the little registered trademark thing.

Reese Harper: I have literally gotten a credential in the mail once, as long as I were to pay for it! Like I had attended something and they mailed me the credential, so I could put in on my business card.

Ryan Isaac: I feel like you could just make them up, just throw them after your name!

Reese Harper: Now, there are some that are really good that have rigorous standards and take a long time to do. You just need to know which credentials are relevant. We have an article on our website, go to and then search for the ten questions to ask before hiring a financial advisor, just go through the archive on our Read and Watch tab and you will see that we go through all of the credentials, and kind of tell you which ones are relevant. I do not have ALL of these, and no one in our firm does. I am not selectively picking the ones that we have got. I just think that there is a list that I personally would respect if I were hiring people right now. The CFA is probably the most rigorous investment credential. That investment individual is very confident. The CFP is someone who has experience with a broad range of financial planning issues and designation, not easy to get, rigorous testing standards. Those two, in addition to the CIMA, is a relatively rigorous credential but I wouldn’t put it in the same camp as the other two in my personal opinion. That is my short list. Outside of that, CPA’s have a good financial background and some of them through their own life experience may have been able to obtain good financial planning skills and good financial planning background. However, the CPA credential does not necessarily prepare people for different financial planning issues. I don’t know, at the end I do want to say I believe having credentials is important. I believe every financial advisor should pursue it, it was really challenging for me to get my CFP and I think I have got three other ones though, that I don’t really use because I don’t feel like they were as rigorous.

Ryan Isaac: Plus, it triples the size of your name. It makes your business card look goofy.

Reese Harper: But I do think people should not overread into the credentials.

Ryan Isaac: I was just going to say that. I was going to say that just because he has got the CFP, does not mean there is no way he will ever hose you.

Reese Harper: No, when comparing two people, if they both have great life experiences and competency, and one had the discipline to study and complete rigorous testing standards and the other person didn’t, then its clear to me whom I would rather work with.

Ryan Isaac: Ya, that says something.

Reese Harper: The other person didn’t do it because they didn’t want to. None of us liked what we had to go through in order to get a credential. It wasn’t fun. It was hard. You will fail if you don’t test well. A lot of people cannot pass the exams. I guess when I am hiring a person then I would want to think through that. Not only did they have real life experience but did they have enough discipline to actually pursue academic rigor.

Ryan Isaac: Great, question number seven is asking somebody if they would be willing to share exactly what they do with their own stuff. How do you invest your money, your kids money, your retirement money, your own insurance? Would you be willing to share that? Reese, will you just basically lay out all your finances here on air?

Reese Harper: Ultimately, I think I probably wouldn’t do it on air. I will give you general recommendations. I do not want to get my attorney people yelling at me. There are an inherent amount of restrictions of things I can say, If we were face to face as clients I could be very transparent. I have shown clients my personal balance sheet before. I do not think there is anything wrong with that. I also don’t think you have to. I just think when a financial advisor is not willing to be transparent with what they do personally you can get a sense of their conviction level on what they would recommend you to do. It is really important for someone to have experience implementing the thing that they are actually recommending and practicing what they are preaching. It is important to know that your financial advisor actually does financial planning for himself. He keeps up on this stuff and is actually believing in the service that he renders. I think that for a dentist you probably ask yourself this, “how is my oral hygiene relative to that of my patients?”.

Ryan Isaac: How often do your kids come to appointments? How often do you get your teeth cleaned?

Reese Harper: They need to be able to tell you what kind of investments they put their money in personally, how much they save, what percentage of their money do they put into these investments, and how much of their net worth is in them. How do they pay down debt? Have they paid off their house or do they finance it? Do they own a business or have they tried being an entrepreneur? What are things that they have done and get a sense for who they are.

Ryan Isaac: Question number eight, how many clients do you work with?

Reese Harper: Why does that question matter, Ryan?

Ryan Isaac: Well, it is fascinating to me because it is just a capacity issue. A really common business model in our industry is the single guy, the solo practitioner and the assistant right? He goes for 30 years like that, and everyone wants to make as much money as they can in their business so they will just push as hard as they can and get as many clients as they possibly can. But I believe there is a fair amount of research that actually shows how many clients a service provider can actually handle.

Reese Harper: Ya, and actually still provide service too.

Ryan Isaac: But that is not how our industry typically works, they typically push as long and far as they can with as many clients as they can, and their clients have to be proactive.

Reese Harper: The squeaky wheel?

Ryan Isaac: Ya, and the ones that aren’t, their service suffers. That’s not fair, that’s not good service, that’s not how it should be.

Reese Harper: I know from personal experience that once I get…

Ryan Isaac: I think there is a range. How many dentists can one financial advisor handle?

Reese Harper: If you are dealing with one occupation, I think it’s easier to handle more.

Ryan Isaac: Are we going to put a number on this? 100?

Reese Harper: I personally would think I could never handle more than 200 clients. I don’t know that it could be that high either. It would depend on the model. If somebody had 80-85 clients I think that is fairly manageable. I have felt like, and I have been in a position where I had a lot more than that, and I felt like it was difficult to remember names of kids.

Ryan Isaac: I feel like there is a sweet spot somewhere between 100-120.

Reese Harper: I think that is probably a decent range. One person is never going to be able to effectively interact with much more than 150 people. I think you could do 200 people, but it would have to be you and a couple of really smart team members. In our case we don’t really, well, an advisor is not on his own. He has an analyst, an administrator, and a senior advisor.

Ryan Isaac: Ya, and every advisor is not out there competing against each other for market share.

Reese Harper: If you have a service team that is different than someone in a Silo. The reason we are bringing this up, and I am bouncing around this subject, is because there are literally financial advisory firms out there (especially if they are transactional, meaning they sell you products). that will be North of 1000 customers. 1000 clients working with one financial advisor. You do not remember the people until you click their name on the computer and they pop up and you are like, “oh ya, that guy.” Then there will be some notes in there like, “remember to ask him about whether he was…”

Ryan Isaac: …Johnny’s college experience.

Reese Harper: If he still likes the Jets!

Ryan Isaac: The Jets? New York!

Reese Harper: Well, Benny and the Jets too.

Ryan Isaac: I thought you would go regional or local.

Reese Harper: I’m a national guy! My teams are all over the place! I think that’s important, client volume is crucial. The bottom line is you have got to know your clients.

Ryan Isaac: I think 80-100 is healthy.

Reese Harper: It kind of goes back to the question we asked first, what do you do? What services do you provide? If you are with a firm that actually has a service model that delivers something that’s equal to everyone then that’s part of it.

Ryan Isaac: Question number nine, I’ve been hearing people marketing with this lately, like radio adds saying, “are you a fiduciary?”. Now that’s important, I don’t want to play this down.

Reese Harper: No, it’s important! I think the public is becoming more aware of what that means. But in simple terms without going into the investment files…

Ryan Isaac: What is a fiduciary?

Reese Harper: Without the technical history of this, basically there is a person, a financial advisor that you work with that has a lot more liability and a lot more responsibility to act in your best interest. Essentially someone that has to legally put themselves in your shoes and say, “What would I do if I were this person?”. That is what a fiduciary is. Then there is someone who is operating under what we call suitability standard. That’s where they have to recommend things that are suitable for their clients.

Ryan Isaac: That’s good enough.

Reese Harper: The facts are that they are being given by the person, and sometimes the facts that you are being given are very narrow, they are a form that you fill out with questions that you answer. So financial advisors who work under a suitability standard don’t quite have…

Ryan Isaac: Who falls under that?

Reese Harper: Usually people in that first model we talked about in the previous podcast, where they are selling products, are people that have hundreds and hundreds of clients if not a thousand clients and they sell products to those people. Those are typically suitability standard type advisors. You want someone who is responsible of looking at your overall situation in your best interest.

Ryan Isaac: The business entity that people look for to find a fiduciary is called a registered investment advisor or an RIA.

Reese Harper: Every financial advisor who is legally a fiduciary is an investment advisor representative of a registered representative advisor.

Ryan Isaac: Rewind this and listen to the disclaimer at the beginning of the podcast, that will teach you what this is.

Reese Harper: You probably won’t remember all of that. If you do ask someone if they are a fiduciary and what’s the name of the investment advisor that they are a part of that regulates them it will be helpful. You can look people up online and make sure that they fall under that standard.

Ryan Isaac: That was actually quite a bit of detail.

Reese Harper: There are also state specific websites or there is an SCC website that people are registered under. Then you get to see what kind of registration they fall under or you can just ask them.

Ryan Isaac: Ok, so the last question, we actually made it to the end of the list, which is fantastic!

Reese Harper: It is a good list, I hope it wasn’t that boring for our young readers.

Ryan Isaac: That’s why we split it up! Last question, why did you decide to get into the occupation?

Reese Harper: That’s a great question.

Ryan Isaac: I’m sorry but I don’t know if that actually would be something on someones mind when they are hiring a financial advisor to even think about. Why are you here?

Reese Harper: But it’s important! It really is! When I wrote this article and went through these ten questions, this is the one that I left for the end. It is not as meaty and substantial at a high level, but f you really look into it and say what is the motivation that caused someone to get into the financial advisory business it explains a lot. I think it is probably one of the most important on the list and remember we do a fair amount of hiring here. The moment I hear someone say, “I’ve always known I wanted to get into finance” and they start explaining it to me in terms of investment banking, private equity, and again, “I just love the idea of getting into FINANCE.” There is this kind of tone, and I’m like this guy is such a little money grubbing cat.

Ryan Isaac: Yes. {laughter}

Reese Harper: I mean, I love private equity, I love investment banking, but I want to hear that the reason people are getting into the financial advisory business has to do with relationships and caring about people. That they want to have a career where they really want to teach and educate and at the heart they are a teacher. They want to educate and that is why they are in it. Money wasn’t the driver, and I am not throwing anyone under the bus in private equity or investment banking, I just feel like even in those industries people who have relationships at the heart of what they do are more successful. I feel like financial advisors don’t always get into the business because they want to teach and educate and help. A lot of the motivation is financial.

Ryan Isaac: We hear that a lot.

Reese Harper: Once they get into it they find out, crap, there are a lot of better ways to make money than this! If you don’t have passion for helping people, I don’t think you will have the staying power.

Ryan Isaac: Which is why there is so much turnover.

Reese Harper: Listen to them and how they talk about their business. Everyone is going to answer the question the way they should. No one will say, “I am here because I want to make a ton of money.” I do ask this question because you need to ask questions like that to kind of give you a sense of what they value. I think that will come out in their explanation on some level.

Ryan Isaac: Well, I like what you said. I feel like inherently the people that are usually the most successful are the ones that start for a reason. They genuinely want to help people accomplish things. They have a passion or fascination for the subject, and not just making money. You can make a lot of money and not really have to do much for it because that is the business model. If you can get a thousand clients and sell them stuff once in awhile. Then hope they only call you every three or four years, then you know, that sounds like a great gig.

Reese Harper: That’s how it is sold to a lot of people! Anyways, I think this is a great list.

Ryan Isaac: Ya, we made it through the ten questions. Anything else you want to add before we wrap?

Reese Harper: I would say this two part series is really a deep dive into making a decision on who you are going to hire as a financial advisor. Don’t let yourself get fatigued by this decision making process that you are going to have to go through. Like we said in the last episode, we all have a tendency to make decision quickly. We have a tendency to not want to go through the process of researching something thoroughly, and hiring a financial advisor is one of the most important decisions you are going to make. Don’t rush this one. Go through the pain that it might feel like some days to interview a lot of different people. You might have to offend a brother in law or family member that is in the business that really has been hounding you down.

Ryan Isaac: That sounds like a different episode.

Reese Harper: Find the right person for yourself because the pain of research is nothing like the pain of trying to fix the mess that can be created by a bad advisor. We are not the only advisor out there that can do a good job, but there really aren’t a lot of guys that are going to be able to advise a dentist really well. Take the time to find someone that can do it. Well, thanks for listening!

Ryan Isaac: Remember please leave us a review on the podcast. For more information go to our website it is, you can sign up for the free newsletter. Our phone number is on the site and a link to our calendar where you can schedule with us to talk. We would be happy to talk with you!

Reese Harper: Carry on!

Ryan Isaac: Thanks.


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