Rethinking Financial Advisor Rankings: What You Should Really Consider
When it comes to selecting a financial advisor to manage your wealth, the traditional ranking and rating surveys in publications like Forbes and the WSJ often rely heavily on metrics such as growth rates and assets under management.
It begs the question: Why does the size and growth rate of a firm matter are if your unique financial needs are being met and the firm is fully staffed? One thing we have all learned over the past few years is to not just follow the most “popular” firms who sound like the next thing since sliced bread.
As an individual seeking the best advisor for your and your family’s financial needs, you should consider looking beyond these surface-level indicators and delve deeper into the methodology behind such rankings. Here are some critical aspects to consider:
Diving Deeper into Rankings Methodology
Firm Acquisitions: Many top-ranking firms achieve their position through aggressive acquisitions of other firms, which can inflate their assets under management figures. It's crucial to discern whether growth is organic or simply a result of mergers and acquisitions.
Client Composition: In some cases, a large client or a few significant clients can disproportionately skew the assets under management metric. Understanding the client base and distribution can provide a more accurate picture of the advisor's performance.
Sales vs. Expertise: A financial advisor's ability to bring in new business does not always correlate with their expertise in managing investments. The best advisor for you may not be the one with the highest assets under management, but rather someone who prioritizes your financial goals and well-being.
Award Authenticity: While winning awards can be a mark of distinction, it's essential to scrutinize the credibility of these accolades. Some advisors may pay for awards or have a significant sponsorship influence on the organizations rating them, which could potentially compromise the objectivity of the recognition.
So if size and growth rate aren’t the key criterial to look at, what are? Here are what to look for in a Financial Advisor
Investment in Technology: A forward-thinking financial advisor will prioritize investments in technology, including robust cybersecurity measures and secure client portals. Ensure that your advisor is equipped with the latest tools to safeguard your financial information.
Client Engagement: Look for advisors who offer user-friendly apps and communication channels that enable you to stay actively involved in your investments. The ability to ask questions and receive timely updates on your portfolio can significantly enhance your overall experience.
Modernization: Assess the firm's approach to technology and innovation. An advisor stuck in outdated methodologies from the 1980s may not be best equipped to navigate the modern financial landscape. A modern and sleek website can be indicative of a firm that values staying current with industry trends.
Award Verification: If your financial advisor touts accolades and awards, take the time to verify their authenticity. Investigate whether the awards were earned through merit or if they were sponsored or purchased, as this can affect the credibility of the advisor's accomplishments.
With the financial landscape evolving rapidly, it's essential to prioritize factors that truly matter when choosing a financial advisor. If you're seeking guidance on navigating the complexities of wealth management, consider these key insights. Let's dive deeper into the nuances of selecting the right financial advisor for your unique needs.
Don’t count on word of mouth or awards for recommendations to financial advisors
I recently traveled to Europe and made a few very expensive mistakes of relying on friends for hotel and restaurant recommendations.
Why were they mistakes?
Because in today’s highly digital world, you can gain SO much information on just about anything and anyone through your own research. And what is good and beneficial to your friends or lawyers or rankings may not be suitable for you.
Below are some areas I like to rely on for research on financial advisors:
IARD Search: Every registered investment advisor must register with the Securities and Exchange commission. Their registration forms with all the information and details, including on their fees, assets under management and more can be found on this website.
Broker Check: This is another website to see if a financial advisor has gotten into any sort of trouble or problems with his/her clients, ex bosses or hiring managers.
Linkedin: Linkedin is the most professional of all social media sites out there and can show you many filters so you can sort and find a financial advisor that stands out to you or research someone on your radar.
Not sure what to look for in a financial advisor or where to start?
Looking to meet some financial advisors and wealth managers that Select Advisors considers its TOP FINANCIAL advisors? Firms we’ve worked with for years now and can vouch for their expertise?
Contact us to meet some of our favorite financial advisors or to guide you on navigating your own research.
Discover critical factors in evaluating a financial advisor's value, such as fee structures, compensation models, and fiduciary responsibility. Learn to differentiate between fee-only and fee-based advisors, and consider cost-effective options like robo-advisors. Whether navigating complex financial decisions or seeking specialized expertise, this guide empowers you to make informed choices about hiring a financial advisor. Find the right advisor to guide your financial journey effectively and align with your unique financial goals.