When choosing a financial planner, trust your eyes

When Chico Marx in the movie “Duck Soup” said, “Who ya gonna believe, me or your own eyes?” he landed on the quintessential issue facing anyone trying to choose who should help them with their financial planning.

Let me make the case for your own eyes.

Trust is at the core of a long-term financial planning relationship. But trust can be challenging when you are in a vulnerable position, dealing with an area for which you have some knowledge or trepidation. And as you interview professionals who are balancing having your best interests in mind with their own self-interest, who ya gonna believe?

There are certainly some shortcuts that might give you clues. Certified financial planners have ethics requirements and standards to which they must adhere. Registered investment advisers are fiduciaries with a responsibility to put your interests above their own. But capabilities and quality can diverge and standards are not always met. So what do you do?

The most important part of establishing a relationship is to ask a lot of questions and then listen closely to the answers. Ask, “What is your experience? Who is your typical client? What are the services I should expect to receive? Is there a team, and who in your firm will I be working with, and what is their experience?” You should feel completely comfortable with the answers to these basic questions.

A more nuanced set of questions: “How do you get paid? Describe your conflicts of interest? How do you manage them?” All professionals have conflicts. Some get paid for selling product. Some might not receive an upfront commission but develop their own products. Some might charge a percentage of assets they manage. Hourly planners can be difficult to find because more experienced planners usually don’t work that way, and even that method of compensation might not be totally conflict free. Should you trust someone who doesn’t seem to take your concerns about those conflicts seriously?

Another thing to pay close attention to is what the firm you are interviewing says about the other firms you’re considering. Is a firm trying to put their best foot forward by sticking it out and tripping a competitive firm? If you are feeling apprehensive, then it is easy to play on that insecurity with disparaging comments. Understand what the firm you are talking to offers and their strengths. If the firm knows you are interviewing others, they might suggest additional questions to ask those firms as you do your due diligence, but it should be to create curiosity, not insecurity.

And in long-term relationships, there will likely always be mistakes. In his book, “From Strength to Strength,” Arthur Brooks wrote: “When you are honest and humble about your weaknesses, you will be more comfortable in your own skin.” The crazy thing about financial planning is, you can’t set it and forget it. Life changes, so things change. The key skill is not being predictive but being adaptive. You need to work with someone who can see when things need changing and can make adjustments.

Most importantly, when it comes to trust, you need to trust yourself. A planning relationship is a partnership. When something doesn’t feel right, don’t engage until you are comfortable. Don’t trust those who say “trust me,” trust those who want to explore why you are unclear or hesitant. They can still try to convince you what they are suggesting is best for you, but you need to know they heard you. This is your life.

Brooks quotes Sufi poet Rumi: “It’s your road and yours alone. Others may walk it with you, but no one can walk it for you.”

Keep your eyes wide open and trust what they see.