What should I look for when interviewing financial teams?
The financial team you hire should be Independent, Integrated, and Individualized. If they aren’t, you are putting your financial security at risk.
Independent –The first question to ask a financial advisor is if they must always work under a fiduciary standard. The fiduciary standard means that they are legally obligated to always work in your best interest. Most people who call themselves “financial advisors” fit into the following categories:
1. Registered Investment Advisor (Always a Fiduciary, Continue the interview process)
2. Broker/Broker-Dealer/Registered Representative (Not a Fiduciary, Stop the interview process)
- Do not have a legal obligation to act in your best interests
3. Dually Registered as a Broker & Registered Investment Advisor (Not always a Fiduciary, Stop the interview process)
- Have a conflict of interest and can choose whether to act in your best interest or not
- As Peter Mallouk wrote in The 5 Mistakes Every Investor Makes and How To Avoid Them, “The dually registered advisor is the ultimate wolf in sheep’s clothing.”
Integrated – You should be hiring a complete team of people that will work together for you. The experts on your team must include:
- Chartered Financial Analyst (CFA ®) (https://www.investopedia.com/terms/c/cfa.asp)
- Certified Public Accountant (CPA ®) (https://www.investopedia.com/terms/c/cpa.asp)
- Attorney
- Certified Private Wealth Advisor (CPWA ®) (https://smartasset.com/financial-advisor/cpwa)
- Certified Financial Planner (CFP ®) (https://www.investopedia.com/terms/c/cfp.asp)
The members of your team should all work at the same firm so that there is constant real-time collaboration. If the financial teams you are interviewing are missing any of these experts, you should stop the interview process with them.
Financial advisors that are not part of a Family Office and do not have a CPA® on staff will often make statements like:
- We work closely with a CPA® at an outside firm (Expensive, not effective, not efficient)
- There is a conflict of interest having your CPA® and Investments handled by the same firm (False Statement)
- Having a different firm handle your taxes provides checks and balances (False Statement, you need to hire a “Forensic Accountant”, not a “Tax Accountant” to perform the audit; ask them what checks and balances are provided by having an outside Tax Accountant)
Individualized – You are in the 1%, you have a unique career, and your situation is different. You do not fit into one of 5 or 6 “Model Portfolios” from a limited menu of firm-approved investments that are offered after filling out a Risk Tolerance Questionnaire.
Because your situation is different, you require a different solution. You have “One Net Worth and One Effective Tax Rate” and you should be receiving tax and investment advice simultaneously to maximize your opportunity. You need a tailored financial solution based on your life, career, and circumstances.
What should I do next?
Email every firm that you are interviewing with the following “MLB Wealth Advisory Team Questionnaire” and request that they fill it out and send it back to you IN WRITING. If they are not willing to put their answers in writing, that is a major red flag.
If you would like to receive a copy of AWM Capital’s filled-out questionnaire, please text or call Will McGuffey at (225) 326-0992 and he will send you a written copy of our filled-out questionnaire as well as help answer any questions you might have about the questionnaire so that you can feel confident when you sit down to interview Wealth Advisory Teams.
