Managing our client's expectations
is as important as managing their portfolio.

During and after the financial crisis—and particularly after Bernie Madoff and the other Ponzi schemes were exposed—investors became understandably reluctant to trust others with safeguarding their money.

Many do-it-yourselfers continue to believe they can handle their own investments best. This, despite the fact that some of them let their emotions get in the way of successful investing.

Others have someone that offers financial or investing advice, but these investors don’t necessarily feel comfortable or at ease with that advice.

Many people want to make a change, but can’t seem to get over the various hurdles in order to do so.

It would benefit an investor who is seeking some direction to meet with a prospective advisor. Most RIAs offer free, no-obligation consultations just to get to know you, and you, them. This involves nothing more than an exploratory meeting with no particular expectations or promises from either side.

When meeting with a potential advisor for the first time, people are often afraid to ask questions, mainly because they don’t want to sound ignorant. But any prospective client should be encouraged to ask questions of the advisor, and the more questions asked, the better the outcome.

As much as many advisors like to talk about how they can provide good service to a prospect, it’s far more important for the prospect to tell the advisor what it is they’re looking for. This includes a specific description of their investing personality and perceived risk tolerance, as well as their preferences for the kind of person (or personality) they would like to work with.

The investor will determine fairly quickly if the advisor they’re interviewing is the right person to manage their investments. Conversely, the advisor will know whether they are compatible with the prospect. This results in a win-win situation either way. The informal interviewing process gives the prospective client the opportunity to ask relevant questions to aid in their decision. .

This is one of the first questions that a good advisor will ask the prospect. The reason the advisor will ask this question is to listen to what this unique individual has to say about their financial situation. So, depending on what you would say, the advisor would then be able to outline an appropriate course of action tailored to your individual needs.

It’s important for both the advisor and the potential client to determine whether they would work well together going forward. So, an examination of your attitudes and beliefs on investing should match up well with that of the advisor. If they don’t match up perfectly, the question is whether either side would be willing or able to modestly adapt in order to make the relationship work.

The most effective way for an advisor to qualify a prospective client (and vice-versa) is to develop a list of questions that will shed light on their expectations for a relationship with that advisor. The questions should also leave the advisor with a fairly good indication of the prospective client’s appetite for risk. It might also uncover how well they’ve managed their finances in the past. Many advisers who screen prospective clients also like to get a glimpse into the personal life of the prospective client by asking questions about their hobbies or familial relationships.