How To Find The Right Financial Adviser

How do you identify the right financial adviser?

It’s hard.

Moreover, it is potentially getting harder.

Last week the government’s chief economic adviser – the Productivity Commission – recommended the formation of an expert panel to select the ten best superannuation funds to assist the 474,000 Australians who join the workforce annually in choosing the best for them.

Can’t wait for the debates on this one – selecting experts is tough.

When it concerns our financials, finding the right adviser is more important than finding the right advice.

Two reasons.


The Known Unknowns

The first of which is the ‘known unknown’ factors.

These seem to be multiplying as quickly as our $2.75T in superannuation monies compounds. The known unknown factors will have some effect on financial lives, but not sure how much.

These are the issues often simmering behind our day-to-day contributing to the current era of heightened anxiety, distraction and populism.

For instance – how to best react to the findings of the Banking Royal Commission due for release next month.

Justice Hayne will be remembered for what his work uncovered. Enough moral hazards, trust deficits, and profit-focus myopia for us and the marketers of more self-interested products, to stoke our known unknown factors for years.

Throw in the institutional hubris evident by a bank Chairman’s comments such as “…we could fire everybody … and start again” to probably conclude there are no easy solutions when seeking advice.

Nor are there easy solutions regarding our impending election.

While the media seem to have the Shortens in the Lodge already, the increasingly powerful crossbenches have shown that winning elections isn’t everything in these populist times. Picking the final legislation which may affect your financial advice from all the vote-catching campaign promises is comparable to picking Melbourne Cup winners. Unlike the Cup, the consequences of our poor decisions are a tad more significant.

With less than 10% of us actively using advisers (and usually these are the most ‘well-off’) the rest of us are attempting to swim against the rip flowing from the known unknown factors like the above.

There are nearly 600,000 Australians who have established their own self-managed approach to planning their financial lives. Unfortunately, the vast majority of these continue to underperform based on ridiculous regulatory costs supposedly imposed to ‘maintain integrity’ for the ‘mum-and-dads’. This highlights the harder factors in the argument that advice and adviser provide significantly different value.


The Unknown Unknowns

The ‘unknown unknown’ factors are those that are invisible to us.

We fail to recognise the unknown unknown factors because our paradigms about specific financial products or our financial lives are already bent beyond the reality.

It’s the unknown unknown factors that convince us those “once-in-a-lifetime-opportunities” are sometimes true, only to despair in retrospect how stupid we were to yet again let someone else use our money to make their money.

It’s the unknown unknowns that remind us “we just don’t have time at the moment” and “money will take care of itself because I’ve worked hard enough”, and then panic, usually too late, when there is no more money as expenses finally overwhelm any chance of workable repayment.

Money doesn’t come out the top or near the top, of stress surveys by accident. Money is so interwoven in our lives, our relationships, our status, our hopes, our health, making any financial exacerbation nastier to effectively and single-handedly manage.

Few of us are naturally wired to respect money and even fewer to appreciate the existence of our unknown unknowns.

Even an understanding of the unknowns and knowns, doesn’t help the next challenge – what does the right adviser look like?


Identifying The Right Adviser

“Why am I so different from them?” ~ Superman

When you’re looking for an adviser that not only can provide the technical capability but also the paths that provide the confidence to effectively navigate your unknown and known factors, Seth Godin’s book “Linchpin” might be a handy reference.

Some of the traits are obvious – i.e. are known.

These include:

  • not having any real or perceived conflict that could ever influence your advice;
  • not another provider of options, but a recommender of the best option based upon your unique best interest;
  • continually positioning whatever seems financially complex and difficult for you simple to understand by talking to you in your language about your aspirations, your forward paths, your complexities, not theirs and their expertise;
  • not making common assumptions that you are “like-all-the-rest-of-our-clients” which is the flashing red light indicating whatever follows is probably standard fodder that might also address your best interests.

Some of less obvious – i.e. the unknowns:

  • your discovery of more reasons to value their relationships every year due not only their expertise of the known unknowns but their respect and management of your unique unknown unknowns – my mother used to remind me we often do the right things for what turns out to be in retrospect to originally being the wrong reasons;
  • the need for professional and emotional engagement not just transactional. They appeal not only to the logic of expert advice but the emotion at the heart of our dysfunctional behaviours that, if left unchecked, will weaken us to the ebb and flow of our unknown unknowns;
  • your advice and care are handled not just by one relationship, but a team whose focus, training, selection and expertise is built upon respect of what Simon Sinek has best articulated – your Why. Their role description isn’t full of well-versed ‘please-like-me’ scripts, but ‘Advisory House’ values that are a mixture of best interests, what is value for you, keeping you on agreed paths, respect for all.


Today’s Advisers

I believe most of today’s advisers became advisers to work by these traits.

I also believe the product foundations of today’s industry have meant many of these genuine people find themselves at times in disingenuous or conflicted product surroundings.

If the Productivity Commission’s recommendations are enacted, the process to select those experts for the panel choosing the top ten superannuation funds will be difficult.

I’m not advocating anyone to delegate the authority of their money or financial lives to someone else or believe that is their best solution.

I am advocating the on-going patient search for value in financial lives being focused on finding the right adviser, not just the right advice.

Products don’t provide the insights, lessons and learnings which fuel the real progress we need and hope for in our financial lives as we strive to achieve what’s meaningful for us or manage what’s troubling us.

Products help and are, at times, crucial as the engines in our cars, provided we know where we are going, and what we must navigate around, both known and unknown.

However, we don’t always need engines for our progress as much as we need confidence we are on our best track.

What do you reckon?


About Jim Stackpool

For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.

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