Qualifications Don’t Matter As Much As You Might Think

When choosing a money manager, would you prioritize charm and charisma over smarts and experience? While most folks would answer “no,” the results of a shocking experiment prove otherwise.

It turns out that most retirees have no idea what to look for in an advisor. Or what questions to ask. And Steve McDonald says enough is enough. This week, he delivers an extra-spicy “Slap in the Face” Award to all of the everyday investors out there who aren’t doing their homework.

Transcript:

Here’s a big slap for the little guy.

Picking the right financial advisor can make or break your retirement. And for many folks, choosing the right person is a shot in the dark. Most people don’t have a clue what to ask in order to ensure that the person is qualified or a good fit.

Well, the Certified Financial Planner Board of Standards, the CFPBS,decided to test several retired couples to find out just how out of touch they are with the qualities they should look for in a financial advisor.

The Board took a DJ, or disc jockey, who knew nothing about the financial industry and gave him a shave and a haircut. Then, they put him in a dark suit and taught him a few phrases, like “401(k) is the way to go,” and set him up in a conference room.

They then had several couples meet with him to discuss their needs and see if they liked him for the job of managing their money.

Just how little did this guy know about the business or anything else for that matter?

Well, he asked his trainers if 529 plans were available in all 56 states. I kid you not!

And shockingly, all but one of the couples wanted the DJ to be their advisor.

And even after they were told that he was a DJ and that it had been a test, one couple still wanted him to manage their money.

Most folks look for personality and charisma, not qualifications or fit, when it comes to choosing an advisor.

But when a candidate is qualified, it really doesn’t matter, because most folks don’t know what questions they should ask to figure out if the person is a good fit.

As I have said before, if you don’t know what to ask of a prospective advisor, you should have your lawyer, accountant or another qualified professional there to ask the questions for you.

There is too much at risk to play the personality game.

If you don’t know what to ask, hire someone to ask it for you. It will cost you a few dollars, but believe me, it’s an investment that will return many times the cost.

Good investing,

Steve