The most recent Dynasty Connect survey asked 1,000 high-net-worth respondents — all of whom have north of $500,000 in investable assets — about their relationship with their financial advisor. According to the survey, a total of 57% reported they had not met with any other financial management professionals before hiring their current advisor.
“It's an extraordinary finding that high-net worth families are selecting the first and only advisor they speak with. It's like buying the very first house you look at,” says Dynasty Financial Partners CEO Shirl Penney.
While cynical readers may think advisors would welcome the news, most financial advisors expressed trepidation about the trend. Their insights reveal why it may be wiser to play the financial advisor field before settling in for the long haul.
Shop Around When Looking for a Financial Advisor
For individuals and couples who are serious about finding a financial advisor who’s a good fit for their particular needs, it pays to take things slow. To advisors, it shows that people are serious and doing their homework instead of making impulsive decisions.
“I don't recommend people work with the first advisor they meet, even if that's me,” says Danika Waddell, CFP President and Founder of Xena Financial Planning. “I always suggest they meet with at least three advisors before making a decision. I'd much rather work with a client who has explored their options and enthusiastically wants to work with me than engage with someone who just takes the first advisor out of convenience.”
Similarly, people should shy away from signing up with any advisory firm that seems overly keen to take them as clients at first glance.
“Most people spend more time planning who they will spend their weekend with than who they will trust their money to for the rest of their life,” says Freeman Linde, CFP and Lead Financial Planner at La Crosse Financial Planning. “The best firms have a process that encourages people to interview multiple firms, knowing they will still be chosen. If the first firm you talk to seems overly eager to get you to say yes, say no.”
Find a Trustworthy Advisor
Regardless of how many people they've met with before, what makes someone settle on an advisor simply comes down to how comfortable they feel putting their money in another's hands.
“Clients are interested in an advisor they can trust,” explains Jonathan Bird, CFP and wealth advisor at Farnam Financial. “Sometimes this is the first advisor they speak to — oftentimes it isn't. Clients want more than just returns; they want high-quality stewardship of their whole financial life. Clients can tell when you genuinely care about their financial and personal well-being.”
“I have not found that clients choose the first advisor they meet with — I have gained many clients where I was not the first advisor they met with,” says Angela Dorsey, Founder and Financial Planner at Dorsey Wealth Management.
“In my experience, I have found that clients choose the advisor they most connect with, the advisor who “gets them” and understands their problems,” she adds. “Clients choose and stay with advisors they connect with on an emotional level, and they can trust to solve their problems.”
Ask Friends for Recommendations
The survey also found a tendency to find advisors via the word-of-mouth grapevine, especially among older clients. Nearly half of the respondents (precisely, 46%) landed their advisor this way, relying on referrals from friends, family, or colleagues.
Those under 45 are pivoting to online channels and are three times as likely to find an advisor by way of search engines, social media, blogs, or other online digital domains.
“Some prospects come visit with me after they have been referred by a friend… a sense of trust plays big,” says Amanda Howerton, Senior Advisor, Rather & Kittrell Capital Management. “When there is a referral by an existing client, I do feel that there is a foundation of trust, but I never want to take that for granted. Nor would I want to do anything to jeopardize that level of trust, as the prospects and clients are likely to talk about their shared experiences.”
Look For Positive Online Reviews
While a referral from a friend builds trust, many people turn to the Internet to verify if other people feel the same way. Positive reviews about an advisor offer a glimpse into the experience of being their client and provide an added layer of confidence when deciding which advisors to contact for introductory calls.
Expect to find more financial advisor reviews online in the coming months, thanks to a recent change in regulations designed to help consumers make more informed and educated hiring decisions. Previously prohibited, the Securities and Exchange Commission (SEC) now permits advisors to ask their clients to display their reviews on certain websites that include required regulatory disclosures.
“The SEC deserves credit for its recent decision to let financial advisors ask their clients to write online reviews,” says Brian Thorp, Chief Executive Officer of Wealthtender, an online directory with financial advisor reviews. “We’ve learned that many people are happy to write reviews about their advisors to help others decide if they’re a good fit to work together, too.”
Consider Hiring a Specialist Financial Advisor
Many advisors cater to a certain clientele, often with whom they share key backgrounds, lifestyles, or values. There are, for instance, advisors for religious groups, specific professions or single parents, or other family units. It could pay to lean into a familiar tribe.
“Vet advisors' websites to see what type of clients they generally work with,” says Christopher Johns, Founder & Wealth Advisor at Spark Wealth Advisors. “Strong candidates will already have clients that are similar to you, either in age, career, family dynamic, or other demographics. If you fit an advisor's “niche”, then there's a good chance they will be a good fit.”
The world of financial management is evolving rapidly with new technology and inter-generational change leading to an explosion of online financial content and influencers spurring surging interest in financial topics. The profession is set for break-neck growth over the coming years, with the U.S. Bureau of Labor Statistics predicting employment of financial advisors to increase by 15% between 2021 to 2031 — triple the rate of the average growth rate for all occupations.
In an increasingly crowded market, how new clients and advisors match up could become even more important — determining the quality of the advice they receive and, ultimately, their financial outcomes.
Delving below the surface and thoroughly exploring the landscape of available advisors could pay big dividends in the long run. By investing the time and effort to find the right financial advisor whose expertise aligns with individual goals and circumstances, individuals can find the right partner to help them trailblaze their own unique path to financial success.