Episode 20: Advisor Experience

In episode 20 on the Wilson Wealth Management YouTube channel, we discuss how to assess a potential financial advisor’s experience level.

In episode 19, we considered a financial planner or advisor’s technical qualifications and professional designations. But without relevant experience, to a level that meets your needs, qualifications do not mean much.

In this episode, we consider the following questions:

“How do I compare skills and experience between advisors with different designations?”

That is a challenge. Especially in today’s world where advisors often develop skills and experience in multiple areas, but may not possess official credentials in all.

You can search the internet to find the core competencies of each designation an advisor possesses. That should provide some information on their main skill sets. But then you need to discuss the specific expertise that you require. And ensure that advisor can adequately meet your unique needs.

“How can I compare the skill level within an individual designation?”

That can also be a challenge. Especially if you are not familiar with the financial services sector.

In some ways, financial services can be like the medical industry. Your General Practitioner handles your daily needs. Some or relatively better or worse than others. Some may have interests or focal areas that make you a good fit. For example, if you are young and into sports, maybe a GP who deals with a lot of sports injuries in his/her practice.

But if you have an emergency, you go to the ER. If you need specialty assistance, your GP refers you to someone who is an expert in that area of need.

Again, you should discuss your needs with your advisor. What can he/she provide? What is outside their expertise? Or what may be within their base knowledge, but not offered as a service.

In my case, I have decent Canadian tax knowledge. Something that is required in daily financial planning or investing work. But I do not provide tax services (e.g., tax return preparation, estate freezes, etc.), because I do not have my tax specialization. Nor do I consider myself an expert in the field. I explain up front what I do and do not provide clients. If their primary need is tax planning, then we are not a good fit.

Of course, some advisors do claim expertise in areas where they should not. So do not automatically assume they are completely on the level. Ask questions, do a proper review before committing.

“Should I select the most skilled advisor? Or should I try and minimize my costs?”

It all depends on your needs. If you have a simple tax return, for example, do you need a tax partner from Ernst & Young? He/she might be the most skilled person, but you will pay a huge premium for expertise you likely do not require. The tax kiosk in your shopping mall may meet your needs.

On the other hand, I do see people try to save as much money as possible on advisors. Often, it comes back to cost them much more in the long run. We will cover this a little more when we look at “free” advice from mutual fund representatives.

“Should I only worry about today’s needs? Or should I also consider my future requirements?”

Within reason, individuals should probably work with advisors they can grow with over time. The client-advisor relationship is often one of trust, comfort, and knowing each other. That helps improve planning and working together. If you have to move to another advisor in three years, as you have outgrown your current partner, then there is a learning curve involved.

To read more on assessing experience, please refer to, “Financial Advisor Experience”.