The 5 Signs of An Advisor That’ll Help You Retire Wealthy
Would you ever leave your retirement in the hands of someone you don’t know?
The thing is most people actually do this, but that’s not even the problem…
In fact, according to recent findings, only 10% of South African retirees are able to maintain their standard of living in retirement, and of those actually retired as many as 60% experience a shortfall between their income and expense in retirement.
Something isn’t right.
And whilst the South African retirement industry has a lot of problems to sort out, you can easily avoid most of them if you just pick the right advisor to handle your retirement.
But how exactly do you know if the advisor you’ve employed to ensure that you can retire properly is actually capable of doing so?
Well, it’s a lot easier than you think, and it all comes down to 5 specific signs.
Let me show you…
Exactly What You Should Expect From A Good Advisor
Technically speaking a good advisor is held to certain standards that requires them to put their clients first.
Some advisors may even have highly respected or even well-known qualifications, the Chartered Financial Analyst (CFA) for example, and they’re then compensated not with commissions but with fees.
Whilst all of that is expected irrespective of your or their circumstance (who would ever want an advisor that doesn’t put their clients first?), there are a few other characteristics you can use to gauge the advisor you’re potentially considering.
Good Advisor Trait #1: Understanding
Seems a little silly to even say this right?
Surely every advisor should understand your situation… Well you’d think this should be the case.
Unfortunately, we don’t live in an ideal world, and not every advisor will have a comprehensive understanding of your situation.
This can fall down to a number of things.
But either way your advisor needs to openly communicate and discuss your circumstances and needs with you.
Without doing so, how will they ever be able to recommend the right service and products for you?
A good advisor will have a comprehensive understanding of your personal situation.
And with this, they can start to put together the right plan for you.
Good Advisor Trait #2: No Pressure
Whilst an advisor is remunerated in a number of ways, these should never come in the way of your decision making.
Pressure and the financial world are an absolute no-no (just ask ANY DIY investor or trader!).
You need to take all the time necessary to make your decisions.
And a good advisor acknowledges and accepts this.
A bad advisor will pressure you into making decisions, or give you deadlines.
Whilst your retirement might be on a deadline, your decisions to build toward it shouldn’t be.
Good Advisor Trait #3: Manageable Numbers
I don’t care what service industry you work in, if you have too many clients to serve logic then dictates you simply cannot serve them equally, or to the level they require you to.
Greedy advisors with client bases that are too large and unmanageable simply cannot put your priorities and interests first.
The sad fact is that those that do this are placing their greed for money above your needs as a client.
Whilst this might sometimes be acceptable for something far less important, say your son’s tennis lessons, it’s not acceptable for your retirement.
Good advisors don’t have overflowing client bases leaving them with little time to devote to you sufficiently.
If you can’t seem to get your advisor on the phone when you need them, or if you keep hearing from them late, some serious questions need to be raised.
Good advisors simply don’t behave this way.
Good Advisor Trait #4: A Backup Plan
Good advisors don’t live forever.
As if it were hard enough to find one.
Unfortunately, like all things in life, circumstances change.
Advisors can retire…
They can switch professions…
Or worse yet they can pass away.
Whatever the reason, a good advisor will have a “Plan B”.
In doing so your best interests are protected.
Should an advisor move on, for whatever reason, there needs to be a plan for who will take over the management of your account.
No plan, no profit is what I always say.
And this couldn’t be more true than when it comes to your advisor.
A solid advisor will have a plan, a poor one will not.
Good Advisor Trait #5: Open Communication
I’m sure you’ll agree that the above 4 traits all require open and clear communication.
It seems a little “standard” to say this, but you’d be shocked how many advisors speak to their clients on ‘autopilot’.
That is, they barely actually speak to them at all and only send automated messages, updates and performance.
This means you’re getting the same communication and messages as eeeeeveryone else.
And is that really worth the fees you’re paying for that service?
Of course not.
Outside of the communication itself, a good advisor will also have a certain level of communication.
What does this mean?
Well a good advisor knows that most investors simply don’t understand the ‘language’ of the stock market, and need things explained to them in simple terms, and language they understand.
Poor advisors get off on knowing more than their clients, whilst a good advisor communicates with their client on their level.
All communication from your advisor, and this includes the explanation of fees, should be easy to understand.
Investing and the stock market is not a complicated game, your advisor knows this, and a good advisor will communicate accordingly.
Bonus Trait: A Poor Track Record
This works in two ways.
Firstly, a track record in the sense of the investment performance they offer.
And secondly a poor track record in the sense of someone who has gone against regulation, or has been involved in some dodgy decision making in the past.
Most people sometimes look at the first, hardly ever at the second.
The first thing you should do, outside of the above 5 traits, is look to your advisors offered performance over the long term. NOT just the last few years.
The scary fact is that most active managers fail to outperform the market over the long run.
In fact, according to MoneyWeb and Morningstar, over the last decade only 3 funds have managed to outperform their market benchmarks.
So you need to make sure you’re picking the potential for good performance from the get go.
Lastly, if you want to look into an advisor’s past give the FSB (Financial Service Board) a call to see if there’ve been any unsavory things associated with that advisor.
Chances are the vast majority of advisors won’t, and the majority of the ones that do will not be in the industry anymore, but when it comes to your financial well-being and retirement do you really want to take that chance?
How To Uncover The Advisor That’ll Give You A Comfortable Retirement
Nobody will care for your retirement and money the way you would.
This still doesn’t stop the vast majority of people who put away for their retirement to employ the services of an advisor.
And despite the struggles the South African retirement landscape is experiencing, finding a good advisor is a lot simpler than you imagine.
Remember, a good advisor will:
- Have a comprehensive understanding of your personal situation
- Not pressure you into making decisions
- Have a manageable client base leaving the right amount of time to devote to you sufficiently
- Always have a back-up plan
- Constantly offer you open and clear communication
- Have a good track record (investment performance and no dodgy and hidden past history)
So next time you’re considering an advisor, don’t forget this 5 step checklist and you could uncover someone who will help you retire wealthy.
Until then, here’s to a good retirement.
The Money Lab