Hiring a Financial Advisor – The “When, Why, and Who”

WHEN should you start looking for an advisor?

For many, hiring an advisor should be considered during the accumulation phase of their life. Unfortunately, many people assume they only need an advisor when they have accumulated a certain amount of wealth, are nearing retirement, or both. In reality, this assumption could not be further from the truth. There are just as many, if not more, topics that need to be properly addressed when building your nest egg in comparison to when you are looking to retire. Additionally, the earlier you hire an advisor, the better chances they have at making a positive impact while someone is young and in the accumulation phase of their life. Just like investing early has a positive compounding effect over time, financial mistakes earlier in life can have negative compounding effects.

WHY would someone start looking to hire an advisor?

This is an extremely broad question and there are a multitude of reasons. Typically, we see major life changes and the questions that go with them as the main culprit. Life changes such as promotions, job changes, retirement, buying a house, getting married or having a baby are just a few of the many reasons. Often, we meet with a couple to discuss a certain topic and after a brief discussion, they soon realize there are many other topics that need to be addressed.

All these topics and their subsequent questions add complexity to a person’s financial life. Each requires expertise and knowledge to properly navigate. The larger concern, which many do not always consider, is the fact that all these scenarios need to be addressed from a holistic perspective and not by themselves in a vacuum. Putting all the variables together and being confident in your final analysis takes a lot of time, which we have found to be one of the factors that is in limited supply for a family. To add even more complexity, the financial world is dynamic and even if you properly do your due diligence and spend your limited time on these questions, you need to consider the time you will need to invest to stay abreast of regulatory and legal changes.

WHO should you hire?

To answer this question, you really need to understand the differences between the two main types of financial advisory firms: Registered Investment Advisor (“RIA”) and Broker Dealers. The main differences are in the services they offer, how they make their money, and fiduciary responsibility. To further muddy the waters, brokers in recent years have been transitioning to or incorporating the RIA business model into their practices.

As an independent RIA, THOR believes the trend toward more RIAs is positive for the industry. We previously wrote a blog on the differences between a wealth management firm and a brokerage firm which would be a good starting place to understand the differences. Other questions, topics and resources that should help you decide “who” to hire:

Interviewing and hiring a financial advisor can be a daunting endeavor. At THOR, we do understand this dynamic, and we have tailored our process to be more informative for both parties instead of sales oriented. It is a three-meeting process that starts with us asking a lot of open-ended questions and learning a lot about YOU. Once we thoroughly understand your personal goals, priorities, and financial situation, we are better equipped to share with you exactly how we will be able to help YOU. After our second meeting, we want you to put some serious thought into your decision before taking that decisive step to join the THOR family. We want this decision to be a good fit for both parties. We believe the longer screening process is essential to ensure we are the right fit for a long and healthy working relationship.

Hiring a Financial Advisor - The "When, Why, and Who"