Spotting Red Flags When Picking An Advisor

On this episode, we’ll give you some red flags to be aware of, teach you how to spot them, and illustrate the difference between an advisor who does the bare minimum versus one who goes above and beyond to work in your best interests.

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Transcript Of Today's Show:

Marc Killian: Hey, everybody. Welcome to the podcast. It's Plan With the Tax Man with Tony Mauro and myself, and we're going to talk about red flags and maybe how to spot those if you are shopping for an advisor or thinking about getting a new one, a first one, whatever the case might be. We're going to go through some content that might give you some insight as to whether it's a red flag or not, and maybe it's not. Maybe it's just something to ponder, but some could be more dramatic than others, so we'll see how that goes. Tony, what's going on, my friend? How are you?

 

Tony Mauro: I'm doing well. Thank you. It's starting to warm up here at the beginning of June and all is good. Looking forward to summer.

 

Marc Killian: That is true. That is true. We are into our June podcasts. This is the first of early June here. We're dropping this. We're doing this one quick today. We're doing this one today. It's the ninth, and we're going to put it out today on the ninth as well, so we are hopping and bopping right along. Red flags, Tony, they're out there in just about every walk of life, right?

 

Tony Mauro: Yes.

 

Marc Killian: We see them on all sorts of things, and usually we're pretty good at spotting these things. Let's go through a few financial ones and see if we can discuss whether or not they are a red flag or at least something to have an eye on. Okay?

 

Tony Mauro: All right.

 

Marc Killian: You've been doing this a long time, right? As an early advisor, earlier on in your career or whatever the case is, maybe this applies to more people, this first one, that advisor or that professional who works with people of all ages and all levels of wealth. I kind of see this one as it could be red flag and it might not be. There's a couple of ways you could look at this. If they're young and they're starting out, they are trying to work with everybody. They're trying to get a book of business going, so on and so forth, and maybe that is a red flag. But then again, it could be an advisor who has been doing this a long time. They've got a lot of retired clients, but then they're also helping those retired clients, their kids and maybe even their grandkids.

 

Tony Mauro: That's right.

 

Marc Killian: So it's kind of a little catch 22, but what do you think about that concept of an advisor who works with all ages, all wealths?

 

Tony Mauro: I do think, like you say, it's definitely there's two ways to look at that one, for sure. And I remember when I was young in the business, and of course, back then it was a lot different.

 

Marc Killian: Oh sure. Yeah.

 

Tony Mauro: Advisors were basically selling.

 

Marc Killian: And fewer and far between, right? Everybody's an advisor now.

 

Tony Mauro: Yeah, yeah. Back in those days, as a young advisor, you were looking to work with anybody because you didn't have any clients.

 

Marc Killian: Yeah. You got to eat too, right?

 

Tony Mauro: Yeah, you got to. Yeah. Nowadays, it's a lot different. There's fee only, there's asset-based ways that we as advisors get paid. But I think on the side of maybe a potential red flag if you're looking for an advisor is you probably want to ask some questions and look for somebody that's got some maybe specialties and whatnot. You certainly don't want an advisor who comes at you and says, "Well, if you don't have $250,000, we're not interested" type of thing.

 

Marc Killian: Okay.

 

Tony Mauro: But you definitely want to check them out and see what types of clients that maybe they have, and see what they generally are doing for their clients. I certainly wouldn't turn away a young person that's just starting out, because obviously, you got to start somewhere as-

 

Marc Killian: It's like the old credit card thing. Remember when we were first younger and we're first trying to get our first credit card, just so we can-

 

Tony Mauro: Yeah.

 

Marc Killian: Because they'd say, "Well, you need credit to buy a car," and you'd say, "Well, okay. Well, how do I get credit?" "Well, get a credit card" or whatever, but then nobody would give you credit. It's like, "Well, how do I get credit if I can't get credit?"

 

Tony Mauro: Yeah, yeah. And if young people want to have somebody in their corner, definitely I wouldn't turn them away. I know that. But some advisors do that, and I get it a little bit, as far as that goes, but I also get that we don't want to just... As advisors, we're always looking for landmines with the clients, and clients, who this talk is about, looking for landmines with a potential advisor, is that if they're all over the board and they just don't really seem to have any, I don't want to say specialty, but vision.

 

Marc Killian: Kind of that niche, right?

 

Tony Mauro: Yeah.

 

Marc Killian: Because if you're a retiree, you probably want somebody who's done this a few times. And you could think about it this way, Tony. Up until this recent downturn with the market, we've got advisors out there who've been in business 10 years, which sounds fantastic, but they've never seen a prolonged downturn in the market because it's been up for 12 years.

 

Tony Mauro: Up for 12 years. A young person comes in my office, I'm going to be 55 this year, and they could look at me and say, "Boy, this guy, he's too old."

 

Marc Killian: Yeah. "He doesn't know what he is talking about." Right?

 

Tony Mauro: Yeah. "He doesn't know what he's talking about," or "Boy, he's not going to be around."

 

Marc Killian: "He's not into crypto, so he's not my thing."

 

Tony Mauro: Yeah. "He's not your thing." And/or they could look at it and say, "Well, you know what? The guy's been around a while. He's seen a lot of things, a lot of-

 

Marc Killian: Exactly. Yep.

 

Tony Mauro: Three recessions for me. And so they're looking at that that way as well, but-

 

Marc Killian: Yeah. I kind of think this is almost like soccer. It's like a yellow card.

 

Tony Mauro: It is.

 

Marc Killian: Not a red flag yet.

 

Tony Mauro: Yeah, not a red flag.

 

Marc Killian: Okay.

 

Tony Mauro: Just kind of, I would say, yellow.

 

Marc Killian: Okay. I like that. All right. The good news advisor, and I'm going to combine this one, actually, in number four. I had top five, but I think I can combine these two together, and actually, we'll just do a top four. The good news advisor or the advisor that says, "Oh, don't worry about the market. It always comes back," well, that is true. Yes, the market does historically come back, but what is your time horizon? My brother is 63, Tony, and he was joking the other day. He's like, "I'm getting ready to retire and this economy is not as good as it was, obviously." He's like, "Boy, I wish I would have just been a few years older and I would've retired in like 2012 or 2013." Because through that bull run we were just talking about, that'd be a great time to retire versus retiring... If you retired in 2012, the next 10 years were pretty darn good, but if you retired in 2007, you weren't too happy about those next three.

 

Tony Mauro: No, no. I would say that this is a flag, because we all are going to experience some sort of downturns. Granted, yes, over time, the market does always come back and that's easy to say, but that's not easy for clients to hear when-

 

Marc Killian: Right, but you got to be able to tell them that. That's that good news portion. I want to work with somebody who's not afraid to say to me, "Hey, Mr. Killian, you came in. You're looking to get retired in three years. Got to tell you, I don't think it's going to happen, and here's why," versus maybe kind of sugarcoating it. I'd rather have the straight truth. Go ahead and hit me hard, and then tell me how we fix it versus dancing around.

 

Tony Mauro: Exactly. And when we work with clients, generally the only way we work with them is if we can get them in here to go over goals, go over and actually do basically where they're at now and where they want to be in whatever time horizon they're thinking. Then I have to break it to them sometimes that, "With what you're doing and how you're doing it and the time you have left, it's not going to happen, so we either accept what will happen or we got to make some changes" type of thing.

 

Marc Killian: Yeah, yeah.

 

Tony Mauro: Definitely don't want to just tell everybody, "Well, yeah, everything's going to be fine as long as you just keep putting money away."

 

Marc Killian: Right.

 

Tony Mauro: Well, if you're 60 and don't have anything, that's not the same as a guy that's 20.

 

Marc Killian: Yeah, exactly. Exactly. Yeah. My mom and I both go to the same cardiologist office. She sees one advisor who is very, everything is... He's always very soft spoken and he talks to her in such a way that, "No, you're doing great. Everything's fine." Even when she's scared about something, he's very uplifting which is great, because she needs that, but then it didn't work for me. So I see a different guy in the office who's like, "Hey, put the cheeseburger down, dude." He's a lot more direct with me, which I appreciate. So there's also that delivery style, I think, when you're shopping for an advisor, finding that person that's that right balance for you of communicating effectively, but also in a way that you're going to implement that stuff.

 

Marc Killian: And that leads me into my next one here on our list, which is the technical conversation or the jargon. Every industry's got it, Tony. I don't think a lot of advisors mean to talk over people's heads. There are some out there, I'm sure, that try to do it with some of the language to make themselves look smarter or whatever the case is. But I think for the most part, you just get into the habit of saying these things. So when you're looking for an advisor, you got to find the one who has a good balance of the technical, but also can make it understandable and relatable.

 

Tony Mauro: Yes. If you have an advisor that's always just talking about technical jargon, charts and alpha graphs, I'd definitely say big red flag. Not to say it may not work, but we all have technology and things. I have it on the accounting side. We definitely have it on the investment side, where you could do a lot of a number-crunching very quickly, but really, we like to present it to clients. Obviously, it's easy to say, but in a way that they can understand is, "Here's where you're at now. Here's what you want, and here's how this is or is not going to happen," just with some simple numbers.

 

Tony Mauro: Now, all of the technology in the background gave us those numbers, but we don't want to generally share a lot of that with the clients. I'll generally bring out a chart or two, but that's it. Most of it's just, we actually go in the conference room. We're writing it on a whiteboard, because I think they can relate to that quite a bit more than just seeing fancy charts and all this stuff.

 

Marc Killian: Right. Yeah.

 

Tony Mauro: It's like showing clients financials. They don't really care about that. They want to know, "Do I have any money or not?"

 

Marc Killian: Yeah. And because also, if you're talking about the strategy, the plan, if it's a little too convoluted or overly technical, is the person going to even implement it, because they're going to maybe get lost in it? If you need to use some of the big terms, if you need to do some things to kind of show, I don't know, the impact or the importance, great. But then also, again, it's that ability to do both the technical as well as the keeping it simple so that we can relate it and implement it. That's the sweet spot. Since you like golf, that's the sweet spot.

 

Tony Mauro: That's right. That's the sweet spot.

 

Marc Killian: All right. Since I combined those two, let's go to our last one here. God gave us two ears, as the saying goes, and one mouth so we can listen twice as much. Yes, on the podcast, you and I are talking a lot because it's just you and I. Otherwise, you're tuning into dead air. But when you have a potential new client coming in, Tony, you're asking some questions, but then you basically should just be listening, because you need to get to know me or us, the client or potential client.

 

Tony Mauro: That's right. And we ask questions and take a lot of notes, and I really try to let them do as much talking as possible. It's amazing, and everybody's like this, people like to talk about themselves. They like to talk about their own problems and whatnot, and everybody knows that guy or gal friend or colleague or advisor of any kind that just won't be quiet, and you just want to... Well, for me, it's like I got to get away from them type of thing. But I think with an advisor relationship, you want somebody that's going to ask you questions. You want to pay attention to, are they really listening to what I'm saying or do they constantly keep talking?

 

Tony Mauro: I'll tell you a pet peeve of mine, and I hate this, is I'm talking, and my wife will do it every once in a while, and she'll start talking before I'm done. It's like, "Well, you didn't really even listen to what I said, so how..." I try not to do that with clients, with anybody, really, but we're all guilty of it from time to time because we always want to talk. I think we do, as everybody needs to, take a little more time to listen. Because boy, you can't have a good advisor-client relationship without us as advisors listening to what you truly want, because every client's different.

 

Marc Killian: Yep. That is for sure. And if you think about these things, Tony, they're kind of universal.

 

Tony Mauro: They are.

 

Marc Killian: It's some basic stuff that we all feel about these things, and that's when you got to start to get to the nitty gritty. Our gut goes a long way for things. So when you're looking for an advisor, if you're shopping for that first time person or maybe looking to get a second opinion because you don't feel like you're getting the service that you need or want, or something's changed or whatever, do your homework. Do some of the credential checks and things of that nature. But also, when you go in for, most advisors do free consultations, just get a vibe and then listen to your gut. Sometimes the gut's a pretty good indicator. Now, some people who are listening are probably like, "Oh, I've got a terrible gut," but you get the idea.

 

Tony Mauro: Well, like I said at the beginning, I have a question listed when a new client or prospective client comes in that I'm asking them, and I am listening, but I am looking for, like I say, my own, what I call landmines, as, "Will this client be a good fit for me as well?" While I'm gathering information, I'm generally trying to make a good vibe decision on, are they going to listen to me? Are they going to be calling me every day just because they saw something on CNN? Because you can get those vibes both ways and it has to be a good relationship, but you as the client need to do the same thing a little bit and make sure that the person's right for you.

 

Marc Killian: Exactly. So there you go, some possible potential red flags to look for when shopping for an advisor. Hopefully, that helps you out a little bit. If you've got some questions, need some help, or just want to do the little shopping of your own and sit down with Tony if you're not already working with him, well then, stop by the website, yourplanningpros.com. That's yourplanning pros.com. Tony is an EA and a CFP with over 20 years of experience in the industry at Tax Doctor, Inc. And of course, again, you can find him online at yourplanningpros.com. Don't forget to subscribe to the podcast, Plan With the Tax Man, on whatever app you like to use. You can also find those links on the website as well. Tony, thanks for hanging out, my friend. I appreciate your time as always. Hope you have a good week.

 

Tony Mauro: All right. Well, take care.

 

Marc Killian: Yep, absolutely. We'll see you next time. And again, make sure you're sitting down, having those conversations that you need to do for yourself, and watch out for those red flags. This has been Plan With the Tax Man with Tony Mauro.

 

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