Three … well, four questions to ask when picking a financial adviser …

picture-23I love those articles that the mainstream financial press likes to trot out from time to time, such as this Wall Street Journal piece that offers Seven Questions to Ask When Picking a Financial Adviser; you will have to read the article for the full story (literally!) but here is their list:

1. What’s in the adviser’s background?
2. What do the adviser’s clients say?
3. How does the adviser get paid?
4. Where are the adviser’s checks and balances?
5. What’s the adviser’s track record?
6. Can the adviser put it in writing?
7. What do other pros think?

Personally I could care less how an adviser gets paid (as long as I know up front) and whether they can write or not … and, I certainly don’t care what the their clients or peers think, because I am always looking for above-the-herd results. And, track records and supposed checks and balances mean nothing when there is a long line of Madoff-wannabes in this world (so, I ain’t handing over the keys to my check account to anybody!) …

… I only want to know three (actually, four) things:

1. How much is the ‘adviser’ worth today?

I only want to take advice [AJC: commercial, money-making advice … not ‘technical’ advice such as tax codes, appropriate legal entities, contract wording, etc.] from people who are already well ahead of me. When I start to catch up to my adviser’s net worth, it’s time to find a new adviser!

2. What does the adviser invest in?

I only want to take advice [AJC: yadda yadda, yadda … as above] from somebody who has made the bulk of their current net worth in exactly what they are advising me to invest in.

3. Will her advice get me to my Number?

Can the adviser then show me – in a way that I can understand (no smokes and mirrors) – exactly how what she invested in to get to her current net worth will get me to my Number by my Date [AJC: apply this reasonableness test to the investment mix that she is recommending]?

Then there’s a fourth question, but it’s for me to answer, not her:

4. Is it something that I love, understand, and feel comfortable doing?

Because, once the adviser has finished dispensing her advice, and you have handed over your money for her fees/commissions, despite what anybody may tell you to the contrary, it’s all up to you!

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