How Do I Get the Most Out of My Relationship With a Financial Adviser?

As originally published in Worth

You made the decision to work with an investment adviser and selected someone you feel great about. Now your financial life will be organized, your taxes will decrease and you’ll be on a straight path to funding your ideal lifestyle, right?

Maybe. The success of a client/adviser relationship depends on whether the two of you are on the same page. Here are several key steps to developing the effective relationship you want:

1. Clearly define your objectives.

It’s not enough to simply want good returns. What are your goals? Do you want to save more for retirement? How much will you need each year once you get there? Do you want to leave money to your kids? Start a foundation? Travel? Be specific about what you’d like to accomplish. A good adviser will illustrate what is attainable and work with you to create an investment and savings plan for getting there.

Of course, understanding the risks associated with your investments is critical to a sound financial plan. It’s fine to dream big, but the risk necessary to shoot for those dreams might not be worth it. By the same token, there’s no need to have excess risk in your portfolio. If you can dial back your risk and still meet your goals, do it. Your adviser will counsel you on the risk-return trade-off of various investments.

2. Be honest about your financial picture.

Get it all out on the table! Poor spending habits, the debt you prefer not to think about, a dependent family member—talk about it. advisers are not in a position to pass judgment, and you may be surprised about ways they can help. A financial plan is only sound if it’s based on the facts. As difficult as it is coming to terms with the challenges you face, you’ll be relieved knowing you have a viable strategy to overcome them.

3. Define your communication style.

The day she hired me, a new client told me, “I’m anxious when the market goes down. I ask a lot of questions. I prefer to talk on the phone as opposed to email. And I don’t enjoy looking at graphs.” I could not thank her enough. By having specific information, I could better serve her. Knowing she was anxious, I could check in with her frequently by phone. Today, I remain direct with her about the risks in her portfolio and am careful to point out when risks can be mitigated. In our discussions about performance and the economy, I use illustrations and words as much as possible. If, like her, you tell your adviser your service preferences, he or she can meet them. If your needs aren’t met, find another adviser.

4. Draft a team and make them all key players.

Invite all your advisers to carry on an open dialogue with one another. A thoughtful investment strategy is one that complements your estate plan and minimizes taxes. Encourage your investment adviser to have a dialogue with your estate planning attorney, your tax accountant, your insurance expert and other advisers associated with your finances. Not only will this spare you the headache of playing the role of messenger, it will allow your advisers to coordinate on your behalf. Financial professionals who understand the complexities of issues beyond investing can create tremendous value that is often worth more than an outperforming investment portfolio alone.

Defining expectations with your financial adviser at the outset will pay dividends down the road. This extra effort lays the foundation for a strong and beneficial relationship.

The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice.  Altair Advisers LLC is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training.  While efforts are made to ensure information contained herein is accurate, Altair Advisers cannot guarantee the accuracy of all such information presented.