How do you know if your financial advisor is a bad fit for you? What about an advisor that you’re thinking about working with? What red flags should you be looking out for?

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Transcript: 

Marc Killian:

How do you know if your financial advisor is a bad fit for you? What about an advisor that you're thinking about working with? Are there some red flags to be on the lookout for this week on Plan With The Tax Man? We'll highlight five of those to keep an eye on.

Hey everybody, welcome into the podcast Plan With The Tax Man here with Tony Mauro and myself, Mark Killian, to talk about some red flags to hopefully you're not ignoring or at least be aware of. And we'll dive into that this week here, Tony, as we're getting pretty close to Thanksgiving. How you doing, my friend?

Tony Mauro:

I'm doing good. Getting ready for the holidays myself and getting ready, well with the staff, for the year-end.

Marc Killian:

Okay. Yeah, well, I mean, it is a busy time of the year for everybody. And so maybe if you are shopping or thinking about doing something, making a change, some red flags to maybe be aware of. So we'll run through a few of these for folks, see if we can help them out. Let's start with the whole cookie cutter conversation, the one size fits all approach. Obviously at this point it's become cliche. Every advisor says you need a specific strategy for your situation, but it really is true because there are still some of those big box places out there that just try to jam everybody into the same kind of thing.

Tony Mauro:

There is. I have more and more conversations with clients about this, and you're right. All of us advisors, everybody knows that we all do the same thing. But I think too many of us, if they're going with this one size fits all approach, I think we're doing a disservice to the clients. So I think if you are a person out there looking for an advisor, you want to ask about what is your approach for your clients and what do you do with them and how do you do it a little bit?

Because for us, we like to start, and I just had a conversation with a tax client yesterday about we don't want you to come to us just for us to have you do say a Roth IRA. And we just manage the money. You're paying us, so we want to provide some value. We want to get to know you, we want to develop a plan and help you through the plan. So I would definitely ask those questions and don't be afraid to do that because that's what's going to determine if they're a good fit for you or not.

Marc Killian:

Yeah, exactly. And every situation's a little bit different, certainly. And there's certainly universal things that do affect us all. But just kind of trying to jam everything into one style that 20 people walk in the door and they try to put them all in the same overall portfolio and approach. And maybe that's the key word right there, Tony, is that a lot of times these big box places, they're really talking more about the portfolio management and things of that nature versus a holistic retirement strategy.

Tony Mauro:

They are. And we don't spend a lot of time on that because I don't want to say we don't feel it's important because it is. But that's secondary to really what you want to do and where you want to get to because we can figure out that part of it later. And there are so many choices that we'll find something there. I don't like to lead with that and talk about performance and this and that because I don't think that that is the first thing we should be doing.

Marc Killian:

Yeah, you're talking about relationship and life planning, if you will, a little bit, more than just portfolio building at that point. Most of us have built one. Sure, we still want to manage things and then stay ahead of the inflation and keep going, but you're talking taxation and social security optimization, there's just all these other pieces that go into it. So that's where the customization truly does come into play. All right. That's the first one, Tony. How about the communication aspect? So also sometimes a knock on some of those places is, well, okay, they got me set up and I never hear from them after that.

Tony Mauro:

Yeah, I hear that a lot. I really do from clients, and sometimes it can go several years. And to me, I always ask them, well then they're not really, in my opinion, your advisor. There's somebody that is maybe managing your money or at least supposed to be watching it, but most fiduciaries, we have an obligation to at least meet with you once a year. But we try to do that more than once a year, even if it's just a phone call or a Zoom call, something like that. Because we do want to communicate with you and we don't want to just talk about how the market's doing and what's going on in the latest rally, or decline, or political situation, things like that.

We want to talk about what's changed in your life and if some of your goals have moved and things like that, we'll touch on some of that current event stuff. But I think it's important to just keep in communication to let you know that we are still looking after things and monitoring your plan, even though you don't hear from us. Because a lot of people, if we don't communicate with you, you probably start scratching your head saying, well, why am I paying these people and what am I paying them to do for me if I'd ever hear from them?

Marc Killian:

Yeah, yeah, exactly. So communication is certainly a big key. And transparency also a big key, Tony. If you can't tell how somebody's getting paid, that's a serious concern. That's a big red flag. And transparency not only in the fees you're paying, but fees you're paying for your products and just across the board. That should just be a must. Transparency across the board.

Tony Mauro:

I think it is. I think it should be one of the first things that are talked about. We talk about it with our clients and prospective clients right up front. And we tell them just like when we do your tax return or your accounting, we're paid pros. And as long as you understand that, here's the value we're going to deliver, here's what you can get for the money you're paying for us. And it's up to you then to decide if you think that there's enough value to pay that fee. But we definitely don't want to hide behind that. And I definitely wouldn't be afraid for all of you out there to ask your advisor that. And just so you know, you're not really questioning that they should be getting paid more of how and what motivates them. And I think more of the truer measure, I'm one of those fee for planning types of guys or asset-based management. I don't really like commissions and things like that. I do think that skews some things and can lead some people to do things that aren't in their clients best interest.

Marc Killian:

Yeah, again, you're talking about relationship building. So why would you not want to have that transparency anyway on all facets of things? So it just totally makes sense. Okay. Tax strategy, so well, Plan With The Tax Man, right?

Tony Mauro:

That's right. My favorite.

Marc Killian:

Exactly. So I mean obviously if you're working with somebody who is, again, the focus is primarily on the accumulation and you don't really touch on some of the other pieces of the long-term aspect of retirement, getting into retirement, all that kind of stuff, then you're certainly a red flag because you got to have a tax strategy, Tony, you know this as a CPA, the prior year information is fine and good, you're handling all that, doing the annual taxes. But you really want to be thinking about future taxes as well, forward-looking. And someone like yourself who does multiple sides of the coin, you're a CFP as well as a CPA, you're looking at both of those.

Tony Mauro:

Trying to always look at both of those, especially with a financial plan planning client because you know what they say. Taxes, they're with us till the day we die. It touches pretty much everything. It's one of the biggest expenses over our lifetime. Why would you plan your future without taking that into consideration. And it's bad. And I don't know what the best word is here to say. I better leave it alone. I don't want to talk about the government. We're coming off to shut down and everything else. But as bad as they are, sometimes the tax code is full of things that we can do legally to help cut our taxes.

And a lot of people aren't familiar with them or haven't taken advantage of that. And it's certainly true with retirement, but there's also some things you can do in retirement to cut your taxes now, but then you've got to deal with it later. You've got basically a payable to Uncle Sam. So it's important to factor that in when you're planning, I think. It's my number one favorite and my number one biggest reason why I think people should use somebody that has a tax background when they're planning.

Marc Killian:

And again, nothing wrong with your CPA looking at the prior year, that's their job, right?

Tony Mauro:

Right.

Marc Killian:

But working with someone who has, I guess the mindset to do both sides of the aisle if you want to stick with the political conversation, sort of is a great way to go about that. And of course doesn't mean that you can't have your own CPA and work with people as well, but just again, make sure you're having that tax strategy conversation and working with a financial professional who is thinking about the tax simplifications of the moves you're making because they will be there. They're not going anywhere to your point. And I guess Tony, that really just brings it back home to the final piece for, so we talk about five today, and that's just not a lot of information gathering.

Look, you've been doing this 30 plus years. It's probably very fair to say if a brand new prospects walk walks into your door and sits down with you in that hour consultation, you probably, if you've got their information, you're looking at it, you probably could give them recommendations right then and there, right? Because you've been doing it long enough. You've seen it enough time. It's like mechanic says, "Oh, yep, I know exactly what's wrong with your car." However you want the diagnostic fully done to make sure that it's not something else or that all the different pieces. And that's where, again, the communication, the information gathering, taking the time to learn about the client is crucial when working with a professional. So if you're not getting that, that's a red flag.

Tony Mauro:

That's a huge red flag because yes, you're right. Somebody walked in my door hypothetically and said, "Look, I want to open up a Roth IRA. Just tell me what fund to put my money into and I'm going to go do it." Yeah, I could give them a number of funds or stocks or whatever else they want, but that's not really what I'm being paid to do. And I do have a duty to make sure that what I'm saying fits them. The only way that I can make a good recommendation, whether it's a plan or a specific investment, is to know a lot about what they want, what they have, where they're going. And so I generally gather a lot of information.

Now we use some tools technologically, we use Asset Map for us. It makes it very easy for the client to get it started without having to feel like they're getting the third degree interrogation, trying to get every last piece of their financial advice or a life. But we try to make it fun for them. But in the end, and they help construct that. They tell us really everything they have and where they want to go and everything. And then we have it, like I say. We take their assets and kind of throw it on a map and rearrange it and come up with a plan.

Marc Killian:

And that's why it's Plan With The Tax Man.

Tony Mauro:

That's why it's was plan. You got to be able to plan.

Marc Killian:

You got to be able to plan. So look, a great financial advisor will build a relationship with you. If something feels off, listen to your gut. We have those things for a reason. A lot of times they're right. And their right advisor hopefully is not making you feel like you're in the dark or are not understanding or whatever the case is. And so if you're already working with somebody and you feel like you've got some red flags, and you're not getting answers to the questions and you're shopping around, or you're just shopping around for their first advisor, take the time to find the right fit for you. That's why they all offer those complimentary reviews and consultations. That's why the podcast, just about everybody has a podcast and video channels and stuff like that. It's a great way to learn more about them and that their philosophy is a good fit for you.

Then you go in for the consultation and so on and so forth, and you see if it's a home run or not. So that's going to do it for this week here on Plan With The Tax Man. Don't forget to subscribe to us on Apple, Spotify or whatever podcasting app you like using, and you can find all that information at yourplanningpros.com, as well as get on Tony's calendar there and his radar for a consultation at yourplanningpros.com. With that, we're going to say we'll see you next... Well, right before Thanksgiving probably. So have yourself a great week and Tony, I'll talk to you soon.

Tony Mauro:

All right, thanks.

Marc Killian:

We'll catch you later here on Plan With The Tax Man.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.