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Robin Powell: Hello again. There may be a few people who can manage without, but sooner or later the vast majority of us need a financial adviser. So, how do you go about choosing one?
Michael Kitces is a well-renowned authority on this subject. He says that it’s important to
Michael Kitces: If I go back 20 years ago, "Do you need an adviser?" was basically saying how else would you find great actively managed mutual funds to pick. You need an adviser to help you pick them, to search and select them. That certainly is dying away. Both struggles and the
Robin Powell: Sadly,
Michael Kitces: A financial advice has to move beyond purely things like investment and insurance product selection, right? Like it needs to actually be about advice, which means to me, first and foremost, you need an adviser who actually has some expertise and competency and training in order to do that. So, does the advisor have a
Robin Powell: But even if you get on with the particular adviser, don’t sign up until you’re sure that, financially speaking, his goals and yours are aligned.
Michael Kitces: The trend that we’re now seeing, worldwide, is the decline of commission-based advisers and the rise of advisers that are either being paid standalone financial planning fees, or perhaps have fees that are attached to investments and other management so at least for all lines that as your investment assets and net worth grows, my business grows as well so I’m very incentivized to make sure that things going well for you. So managing costs and expenses and getting reasonable performance is actually good for me as the adviser as well as you as the client rather than: “Hey, I’ll sell you a fund and I’ll get paid and if you don’t like it, that’s actually good because that means I can sell you a new one or replace the old one and get paid again."
Robin Powell: Thank you to Michael Kitces and until next time. Goodbye.
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