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From time to time, we all have need for a professional advisor. As a purchaser in an advisory relationship, trust can be one of the toughest issues that you will face.
As an advisor, I am asked these common questions repeatedly: “how do I know the money I’m going to pay you will bring me value?” And, “how do I know to trust that you’re going to work in my best interest and not yours”?
These are important questions. And, this tough decision process is not limited to your need for a financial advisor, but also one you need with any professional you purchase services from.
Mindfully building trust
Aware of the tough decision making issues, we’ve been thinking about the concept of mindfully building trust. We think this is when an advisor spends time speaking with you about the following issues
• Their qualifications, experience and outcomes with the work being proposed.
• Value based fees and how they are derived.
• Being up front with those conflicts of interest that are inherent in the relationship.
• Keeping commitments that are made.
• Making sure everyone is clear in what you’re trying to accomplish.
The first step in building a relationship is making sure your advisor has the skills for the job they’re proposing. This doesn’t mean the advisor knows how to describe the process, but that they actually have had experience with implementing the strategy, tactic or process they’re proposing.
Sometimes your advisor might propose they play the role of coordinator and talent scout. This can be a valuable service because it allows them to help you source the proper talent for getting a job done. Someone playing this role should begin with helping you gain clarity about what you want to do.
The second area of discussion is one of fees. If possible, get your advisor to quote you a value- based fee. This means they would get paid a smaller fee up front and a larger fee when the solution they are helping you with is implemented.
Our research shows that some owners of private businesses don’t like to pay hourly fees to professional advisors. The owner often sees little value when this happens. We have been working on the concept of value fees and are getting better responses from our Clients when we’re able to introduce this concept.
The third point must be covered. Everyone has conflicts that need to be managed. It’s best for all to understand what the conflicts are in advance. You also want to know what your advisor does to manage these conflicts. At the very least you want to discuss their suggestions from the viewpoint of their conflict. This helps make sure they stay focused on your needs and not theirs.
The fourth point is just common sense. “If you want to build trust with someone, you must do what you say you will do”. If for some reason, a date slips, it’s important to know your advisor will call you to explain the problem and ask for an extension. We find it hard to trust people who don’t communicate and keep their commitments.
The final point is the most important. Too many advisors have a solution in search of a problem. You want your advisors to clearly understand what you’re trying to accomplish and then make suggestions that are effective and efficient in helping you achieve your goals.
Our Objective Review process is designed specifically to not only help you gain clarity about what you should do, but also to make sure our work together builds trust towards achieving your goals.
If you would like more information from our firm, please visit us online or e-mail us and a Stage 2 associate will get back to you.
With Warm Regards,
Stage 2 Planning Partners
Josh Patrick © 2006
Securities and Investment Advisory Services offered through NFP Securities, Inc., A Broker/Dealer, Member NASD/SIPC and a Federally Registered Investment Advisor.
Stage 2 Planning Partners is an affiliate of National Financial Partners Corp., The parent company of NFP Securities, Inc. Representatives listed on this website are currently registered to conduct securities business in the following states: AZ, CO, CT, FL, IL, IN, MA, MT, NC, NH, NY, PA, RI, VA, VT, WA
NFP Securities is not affiliated with Harris- Murray
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