Why do people go to a doctor? As well as we know our own health, we want the perspective and expertise of someone who has broad knowledge and deep experience. Often, even the most accomplished and successful people struggle with how to engage a financial professional. Whether you’re contemplating seeking professional guidance for the first time or you are thinking of making a switch, being informed and prepared is essential to developing a healthy relationship.
Dearborn Partners is an independent, privately held boutique investment management firm. We have been working with primarily Chicago families and individuals since 1997, offering tailored advice and service to help guide our clients toward achieving their goals and those of their future generations.
We believe that success of the relationship between client and advisor revolves around one thing: trust. Trust is the confident expectation of something. It means your ride will be there on time and that your spouse will take care of you when you’re ill. It means you have faith in the other party when you sign a contract. It could be the most important concept in a cohesive and progressive society.
Having a trusting relationship with your advisor is the key to success. Knowing that they will work in your best interests, communicate risks clearly, and be reliable is paramount. Here we offer some helpful guidelines to work through the process of selecting an advisor you can trust.
1. Determine Your Needs
“Financial advisor” is an extraordinarily broad term. The common titles of “Wealth Manager,” “Money Manager,” “Investment Advisor,” “Asset Manager,” or any combination can mean a variety of things as far as what services are provided. When engaging a financial professional, know what your needs are. Perhaps you need help with investments, financial planning (think college or retirement), insurance, estate planning, philanthropy, or any combination of those. State what you need and ask how your advisor can accomplish that.
2. Define Success and Set Expectations
As is beauty, success is in the eye of the beholder. Be frank and forthcoming about what a successful relationship looks like from your side. Achieving the highest total return or the highest risk adjusted total return are two different conversations. Maybe realizing a level of wealth at a certain age is what you are aiming for. Confidently weathering it through the next recession could be a goal of yours. Picture yourself in your desired outcome and illustrate that to your advisor.
3. Fees and Costs
A tough but essential topic to discuss is what you will be paying. Explicit costs will vary depending on what you require: your level of needs will necessitate a commensurate degree of offerings, which will relate to the amount of fees paid. Most annual fees will be between 0.75 percent and 1.5 percent of assets. If your fees differ from this, ask your advisor how and why they are able to charge a higher, or even lower, rate. Lastly, be upfront about implicit costs. It’s not uncommon to be in investment vehicles or products that have an implied fee, such as some life products or mutual funds. These can generate extra costs that aren’t always readily apparent. Ask any potential advisor to always be up front about any costs.
When planning your future, it’s important to get in contact with a financial advisor that you trust; leveraging your network and reaching out to friends and close acquaintances is a good place to start. It’s crucial to know what your needs are as well as communicating your expectations to your advisor. If you don’t end up developing a relationship with the advisor, be sure to at least be inquisitive and listen to advice; the more perspectives you hear, the more you will learn about investments, and the better you will be in the long run.
Feel free to reach out to us for advice on how to get started or even our thoughts on your favorite stock. We would love to start building your trust.
John V. Celentani, CFP®, CPWA®
Director, Portfolio Manager
John is responsible for providing financial planning and personalized service to private clients of the firm. He focuses on asset allocation, income tax planning, retirement and education planning, as well as sophisticated charitable giving and estate planning techniques. John served as Vice President in the Wealth Strategies group of Northern Trust for eight years prior to joining Dearborn Partners.
Jackson Finks, CFA
Analyst, Portfolio Manager
Jack currently supports Dearborn’s Rising Dividend Portfolios through both research and portfolio management. He has been with Dearborn since 2013 and is a CFA charter holder.