Who’s your typical client?
Barry Glassman of McLean-based Glassman Wealth Services focuses on multiple generations of wealthy families.
“Last year, we did everything from negotiating a purchase of a $30-million jet to negotiating a client’s Verizon bill,” he says.
Armstrong specializes in inherited wealth as well as single women and widows, while other firms focus on small business owners. She recommends working with an adviser who has at least three years of experience at the same firm with clients like you, to be sure the adviser has familiarity with your situation.
“You don’t want to be the only one in your category,” she says.
Many advisers provide client references so potential clients can hear about their experiences firsthand.
Can I “break up” with you at any time?
“Figure out what will happen if things go wrong,” says Gendelman. “It’s like having a prenup.”
If an adviser recommends buying an annuity with yearly sales charges, then you might have to pay a big commission to get out of it.
Many advisers request that you sign a contract, in which case you want to understand what you’re locking yourself into. Most contracts allow either side to break off the relationship, and they specify how any fees would be refunded. The Family Firm, for example, offers a prorated refund based on the date the client ends the relationship, and it doesn’t recommend products that lock up clients’ money.
How did your clients fare in the downturn?
Advisers can be most helpful during downturns because they encourage clients not to sell shares at low points, just when most people want to get out of the market.
“A professional adviser will tell you, ‘This is not the time to sell,’ ” says Farr. “The opposite is true, too. When stocks are going up, you don’t want to put more money in.” Investors can get carried away with emotion during stock-market turbulence, so he sees his job as helping people act rationally.
Advisers will often provide examples of portfolios they managed during negative return periods, or average rates of returns for funds they frequently use. Be wary of any adviser unwilling to talk about performance.
Have there been complaints lodged against you?
In addition to asking this question, you can also use Web sites such as cfp.net and finra.org to see if advisers have any blemishes on their public records. Both sites contain all public disciplinary actions on record.
How will we work together and how often?
Cheng checks in with her clients at least every six months—once or twice a year is standard for financial planners. Gendelman says that while he encourages clients to call whenever they want, quarterly investment reviews are too frequent.
The optimal frequency of any financial checkup depends on the client’s preferences as well as the type of expertise provided, which is why financial planners such as Cheng check in often, while estate attorneys such as Nancy Fax, who usually need to make changes only after major life or financial events, may update a client every five years.
Glassman recommends that people also ask how many clients an adviser has; the answer will suggest how much attention is given to each one.
“It’s important that an adviser has few enough clients to know who’s affected by changes in the economy, law, taxes, and investment world,” says Glassman, who works with 110 families. Potential clients should also ask whether they’ll be working with the adviser each time or with different advisers at the firm.
Nancy Trejos met with her planner, Christine Parker of Parker Financial in La Plata, once a month for several months. Now she just checks in occasionally by e-mail. In between meetings, she called or e-mailed questions, such as about whether she should transfer her credit-card debt to a new card with a zero-percent introductory rate.
Trejos credits her planner with helping her get on top of her debt and stick to a budget: “I did the work, but she started me on the path. I could have done it on my own, but she made it easier.”
This article first appeared in the November 2010 issue of The Washingtonian.