Geller Law
Consumers should have a good relationship with their financial advisors. This relationship should begin with a meeting. Not with a long phone call. Face-to-face is best whether in person or, if you are very comfortable with the technology, virtually. Financial advisors should know their business. They should also know their clients. Clients should come to understand who their advisor is, what makes them tick, and what to expect in discussions in the future.
Consumers often do not understand that when they sign forms in their advisors’ offices, one of the forms is usually a contract or letter of engagement. These can be legally binding. They should require reading and understanding. Many contain technical jargon. Consumers may require an explanation. It is not a case of "sign here and all will be well".
In professional relationships, the client has to get to know the professional to trust in the guidance and opinion of the professional. The professional also has to get to know the client. All financial advisors should know their clients well enough to give good advice that is tailor-made for their clients.
Financial advisors may work off of a checklist. If so, they should not be restricted by the checklist. Often, the checklist will ask the advisor about "investment objectives" or some other term. This tells the advisor to ask questions and conduct a discussion about what the client wants and needs. It should not be a simple matter of, "what are your investment objectives?" Clients often do not know what is meant by the term. When it is explained, they often do not know what they want to accomplish.
The first meeting between a financial advisor and a client should therefore be a two-way exploration.
· From the client's point of view, there should be a discussion about just who is the advisor, how the advisor operates, what the advisor has to offer in the way of advice, services, and products, and what can the advisor not do.
· From the advisor's point of view, there should be a discussion about what are the client’s financial circumstances, how much information can be absorbed and do they need, what products and services should work, what are the alternatives and what are the benefits and risks of each.
It is not uncommon for the advisor to require more than one "first" meeting. Many clients cannot absorb all that the advisor has to say. Many clients do not have the time to conduct a full discussion the advisor needs to form a professional opinion. One thing is likely: if it is the practice of the advisor to sign up the client first and answer the questions after, then the relationship is off to a bad start.
Example
Discussions at first meetings should be wide-ranging. Consider these, as examples:
· What is the client's investment experience?
· Who has the client dealt with before?
· What type of products or services?
· Who are the client's dependents?
· When will the client retire?
· What are the financial expectations of the client both now and in the future?
· What are the client’s financial resources?
· What risks the client faces, in health, in financial circumstances, in employment or business?
All of these - and many others - allow the advisor to better understand the client.
From the point of view of the client, the discussion also serves to inform the client about the advisor. Consider these, as examples:
· How well does the advisor communicate?
· How interested is the advisor in the client?
· What type of service and relationship can the client expect going forward?
· Can the client understand what the advisor has to say?
· Does the advisor give opinions before receiving all the information?
· Does the advisor continually push a specific product or service?
· What pressures are there?
· Is this what the client wants in an advisor? Can they work together?
Tip
Clients should ask for what they were told orally to be confirmed in writing before they have to make a decision. Some people have to see it in writing before they understand. Some want to check with a relative or family friend. If they see it in writing, they can form questions without the pressure of time. If the advisor says that "it cannot wait", that is a warning bell. If the best interest of the client comes first, then it can wait until the client understands the costs, benefits, risks and rewards.
Tip
When the client is asked to sign the document at the first meeting, the client should take all the time necessary to read it in full. If the advisor says this is not necessary, this is a warning bell that something is wrong. It is better to take the document home and read it at leisure and make notes of things that are unclear or that raise questions. At the next meeting, the client can ask those questions and seek clarification. There should be no rush to enter into a contract.
Tip
If the client is unhappy with the advisor at the first meeting, it is unlikely to get better with subsequent meetings. There are many fish in the ocean. The client should seek someone else.
