5 Questions: Client/adviser matchmaking and the essentials of the relationship
- June 1, 2023: Vol. 10, Number 6

5 Questions: Client/adviser matchmaking and the essentials of the relationship

by Mike Consol with Nick Stuller

Financial advisers don’t always have the best reputation, in some cases because they talk down to clients, they put their interests ahead of their clients, and they fail to return phone calls or reply to emails.

Clients sometimes become part of the problem by withholding information or panicking during market corrections.

One of the keys to a fertile adviser/client relationship according to Nick Stuller, a 35-year veteran of the financial services industry and the founder and CEO of MyPerfectFinancialAdvisor, is to more carefully match clients with suitable advisers. He is also author of the book The Truth Shall Set Your Wallet Free, Secrets to Finding the Perfect Financial Advisor.

Observers estimate only 30 percent of U.S. adults have a financial adviser. Why is that figure so low?

The biggest reason so many investors don’t use an adviser is simply that they have never been educated about financial advisers from an inclusive, trusted source. The primary way we learn about advisers is really from advertising, which is hardly an objective way to learn about something. Other reasons include the propagation of myths, like you need to be rich to have an adviser. This used to be true 30 years ago, but no longer is with the proliferation of advisers catering to every size investor. Scandals like the Madoff scheme coupled with movies like the Wolf of Wall Street also fuel the trepidation about advisers. In addition, some investors literally have never heard the term financial planning as a professional service, and yet others think they know more than advisers. When combined together, there are significant forces pushing investors away from advisers.

What is the reputation of advisers?

Perceptions of advisers by those without an adviser are mostly negative, due to bad practices that were very common years ago and the publicity of current bad conduct. Notably, it is quite rare to read positive stories of financial advisers in large part due to stringent regulatory constraints. For those investors that have an adviser, it is very different with most being pleased with their adviser.

You contend many advisers and investors are mismatched. What constitutes a mismatch?

Indeed, too many (but not the majority) of investors and advisers are mismatched. When you ask the open-ended question to an investor “Tell me about your adviser,” you will hear things like “He is a great guy” or “I’ve known her for so many years.” Rarely will you hear, “He is a CFP and a CFA that built a financial plan and allocates my assets in a portfolio of ETFs, in addition to some alternative assets” or some other similar specific description. Given the lack of basic understanding of the adviser’s day-to-day activities, many investors hired someone mostly based on non-technical criteria, such as personality or family relationship. This means the odds are low they are optimal for the investor using criteria, including technical knowledge observed by designations, client-type focus, work history or experience with similar client experiences.

What constitutes a seamless relationship between adviser and client?

A seamless relationship means that both the adviser and investor are completely open and candid with each other. The adviser initially and on an ongoing basis explains what they do and do not do as part of their service, clearly and in plain English. The investor shares all relevant information and does not hold back financial details, so the adviser has all the information needed to make the best possible recommendations. For example, some investors don’t share that they have other self-directed accounts out of fear of “being sold,” and this is always a mistake. This does not mean blind trust, as the “trust but verify” mantra is more important than ever in a post-Madoff world. However, if the investor does not understand a term, strategy or approach, they must tell the adviser and never leave a conversation with unanswered questions.  Today’s technology makes information sharing vastly easier for both parties, driving far better outcomes over time.

What technology exists today that could remedy the problem?

We are in the early years of an explosive financial technology revolution. The number of very specific tools that aid in the performance of an adviser’s job is staggering, from risk tolerance to niche marketing, to financial gamification to data gathering and AI data analysis. By objectively communicating the utility of these tools, investors become more educated and less fearful. Taking an objective fact-based approach to educating investors will generate trust and engagement. The simple fact is that we in the industry know full well that advisers greatly benefit investors, the goal now is to communicate this message to the outside world.

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