How the right financial adviser can help you beyond your portfolio

Frederick D. DiSanto, CEO, The Ancora Group

When investors are seeking a financial adviser, they often make their decision based on price, figuring that everyone offers the same products. But that could be a mistake, says Frederick D. DiSanto, CEO of The Ancora Group.

“Instead of looking for the least expensive adviser, look for someone you can work with, with whom you feel comfortable and who has a real interest in helping you achieve your goals and objectives,” says DiSanto. “Pricing is always a concern and it should be commensurate with what is out there in the marketplace, but building that relationship with someone you trust is critical.”

Smart Business spoke with DiSanto about what to look for in a financial adviser and how to get the most out of the relationship.

What are some important traits of a good financial adviser?

The first thing to make sure of is that you are comfortable with that person, because it is all about the relationship. Is this someone with whom you feel that you can build a strong, solid working relationship — and friendship?

When looking for someone to manage your assets, that relationship is so important. You have to believe that once you set your goals and objectives and make that asset allocation, the adviser can execute. If issues arise, are you comfortable enough to call them in good times and bad? The stronger your relationship is, the better and the higher the probability will be that you will meet your goals and objectives.

The adviser should help you define your goals and risk tolerance, then provide solutions to meet your individual needs. There is no one-size-fits-all solution. An adviser should get to know you and your needs and not simply try to sell you products. Advisers should take the time to address a total risk management solution and take into consideration issues such as the riskiness of your career and your business and incorporate them into the risk profile of your investments.

This is not a five-minute conversation. It is an ongoing conversation in which the adviser helps you assess your goals, objectives and your stomach for risk to create an investment road map. Forming this type of relationship can really differentiate advisers.

The best advisers are not trying to push a product but are working to provide the best solutions to their clients. Your adviser needs to understand that not everyone is the same and that he or she has to mold, develop and create a total solution to accommodate your individual needs.

How would you define the adviser/client relationship today?

There is much more transparency because of the volatility we have seen in the market in the last few years, and there is much more communication between adviser and client.

Asset allocation is one of the most critical elements to understanding a client’s risk exposure. Throughout the past four years much more attention has been paid to a portfolio’s asset allocation. As the markets go up, people tend to be more aggressive and lose sight of their risk tolerance. Today, the focus is more on developing the right asset allocation, which will help investors weather any market conditions.

How often should investors meet with their advisers?

Every client is different, but an investor should meet with his or her adviser at least once a year, if not more, to review performance and determine if goals, needs or risk profiles have changed.

If there is going to be a life-changing event — for example, you want to retire in three years — you need to be communicating with your adviser about your goals and objectives so he or she can work to help you meet them.

How important is it for your financial adviser to work with your tax and legal advisers?

It is critical. Investors often have multiple investments, so having your financial, legal and tax advisers working together will help them better understand your total tax liability, gains and losses to create the most tax-efficient scenario. Your financial adviser should be providing your CPA with information about what your gains and losses have been on a quarterly basis to make sure nothing gets overlooked. And from an estate planning point of view, there is a lot of coordination to be done with legal advisers to ensure assets are held in the appropriate name, title, etc.

How should investors approach the issue of fees with their adviser?

The first thing an investor should look at is whether he or she can work with this adviser. Do you feel comfortable calling on Saturdays when you have a question or concern? If you believe you can work well together, then look at fees to determine how they compare to the marketplace and have a conversation about the discrepancies. If the adviser’s fees are slightly higher than the market that should not really dissuade somebody if the relationship fit feels right.

Is it fair for clients to ask their advisers for help with networking or other services for which the advisers don’t get paid?

Absolutely. Your adviser should go the extra mile to help you network. Having an adviser who can help clients build centers of influence and relationships outside their own network and help them grow professionally and personally is extremely important. It does not come out in the performance of your assets, but it comes out in your relationship. If you have a great relationship, your adviser will want to help you, whether it is with investments or business. It is not strictly what investments you make in your portfolio, it is also all those variables that you cannot put a hard number on.

Frederick D. DiSanto is CEO of The Ancora Group, as well as an investment advisor representative of Ancora Advisors LLC (an SEC Registered Investment Advisor).  Reach him at (216) 825-4000 or [email protected]

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