In last week’s post on Laying a Financial Foundation, one of the tenets mentioned was: Choose Advisors Carefully.
Entering an arrangement with an advisor, whether contractural or not, is similar to a marriage. No, you’re not going to spend the rest of your lives together sitting on the front porch in rocking chairs while one shouts and the other one keeps saying, “What?”
But, you are going to work very closely together. You want that relationship to be the best experience for both of you.
Here are some questions to ask yourself and them before you “put a ring on it.”
Purpose and Result
- What role will this advisor perform as part of my team? Too often we forget we’re building a team and our business is only as strong as the weakest link on our team. Be clear about the role each advisor will play before you interview them.
- What result do I want them to help me get? First, remember you are ultimately responsible for results. They are on your team to help you, not do everything for you. Further, you won’t know if they are delivering the goods if you don’t clearly define the desired outcome beforehand.
Experience
- How much experience does the advisor have delivering the specific results I am seeking? Just because an advisor has a track record for delivering results doesn’t mean they have the experience or know-how to deliver the specific results you desire.
- What experience does the advisor have with the specific issues I’m dealing with? It’s important to be clear about your desired results and also about your current issues and challenges. You want an advisor who not only claims to provide the solution, but has experience with the direct problem as well.
- What is the average income and business experience of the advisor’s clientele? It’s important to select an advisor that has experience at the same level you are currently at. Otherwise they will be providing solutions that don’t actually apply to you. I’ve seen this happen quite a bit with accountants for instance. Accounting for an early-stage retail store is much difference than accounting for a 1031 exchange through a self-directed IRA. Much different. Find an advisor that matches your experience and income level.
Education
- Does the advisor have the educational requirements for the particular role I’m asking them to fulfill? This is self-explanatory.
- Does the advisor have the necessary professional credentials for the role I’m asking them to fulfill? Sometimes a basic education isn’t enough. Sometimes you’ll need someone with a specific designation in their industry.
- What does the advisor do to continue their education? This is often overlooked. I’m not looking for an advisor who did a bunch of studying and got a degree years ago. I’m looking for one who is a constant learner and understands the latest methods and trends.
Compensation
- How is the advisor normally compensated? Flat fee, partial payments, retainer, hourly, etc. Don’t be surprised when the invoice arrives in the mail. Make sure this is clearly outlined before you begin.
- Are the advisor’s interests structurally in alignment with mine? Will the advisor get paid regardless of your results? Does the advisor have any conflicts of interest? Make sure you are creating win/win compensation plans.
Communication
- How does the advisor normally communicate with clients and will this work for me? Most problems are not the problem, it’s usually communication or lack thereof that creates problems. Make sure you’ve outlined how best to communicate and share information.
- Who exactly will do the actual work and who will I be communicating with? It’s important to know if you’ll be dealing with the person delivering the work or with an administrative assistant or other person on their team.
Viewpoints
- How does the advisor feel about money? Money evokes all kinds of views, emotions, and beliefs. It’s important that you choose an advisor that is in alignment with your viewpoint on money. Otherwise you’ll experience too many differences, disagreements, and potentially even arguments.
- Is the advisor at a personal income/wealth level that is similar to me or similar to where I want to be? An advisor will always be a better fit if they have had similiar experience as you and if they deeply understand your challenges because they’ve experienced them personally.
Final Questions
- Who is the advisor’s biggest competitor? If they say they don’t have any, they’re lying. And you don’t want to do business with a liar. If they are hesitant to give you that information then the competition is probably a better option for you. If they are confident in their experience and ability to deliver your desired outcome they should have no problem sharing with you.
- What can the advisor do for me that the competitor can’t? This is a tell-tale sign whether or not this advisor is right for you. There should always be something clearly different or unique that will tell you the relationship will be a great one. Hint: It’s rarely price.
- Why should I hire you? Shockingly, a very under-utilized question. If you can’t be direct enough to ask this question and the advisor can’t be candid enough to answer it, neither of you should enter into any type of relationship.
Bottomline
Ask questions. Lots of them. Don’t jump into a relationship prematurely. When choosing advisors, do your due diligence and don’t be shy about getting the answers you need to make an intelligent decision.
What did I miss? What questions do you ask?
About the Author: Greg Hartle is co-founder of New Methods. And also founder, co-founder, investor, and/or strategic advisor with over a dozen businesses. Greg also speaks and consults professionally with businesses, non-profits, and other groups on 21st century capitalism, leadership, and integral life strategies. Connect with him on Twitter and Google+
