Building a Relationship with Your Advisor

Douglas L. Nelson, CPA, PFS

Oct 25, 2021

Aside from your spouse and maybe your doctor, your relationship with your financial advisor will likely be one of the most important and intimate of your life. Or, at least, that’s what it should be.

As a CPA and a financial advisor for nearly four decades, I’ve helped dozens of clients craft a financial plan that allows them to enjoy the life of their dreams. Every plan is a unique roadmap for their lives, and that’s the way it should be. Don’t confuse the map for the goal, though. My job – and the job of everyone at TCI – is to walk with you, map in hand, through your life’s journey.

To do that successfully, you’re going to need an open, honest and trusting relationship with your financial advisor. So, here’s my best advice on how to build and navigate that relationship:

1. Be Open

What are your dreams? That’s one of my first questions as your financial advisor. No one is likely to have asked you that question with any sincerity since your high school graduation, and even then they mostly just wanted to know what you were planning on doing for a living. So, it’s okay if it takes you a while to warm up to the question. Take your time. Ponder the possibilities.

Eventually, the answers will bubble up from someplace deep inside. Maybe you want a quiet and modest life off the grid in Montana. Or maybe you want to howl into the wind as you climb the Seven Summits, the highest mountains on each of the seven continents. Or maybe you want to create a humanitarian legacy, say, a foundation to fight cancer or feed the hungry. No matter what you envision for your life now or when you leave the workaday world, you’ll need a map to get there.

The more detailed the map, the easier it will be to navigate. We’re not talking about making a living anymore, but rather making a rich and rewarding life. As your financial advisor, I want to hear everything from the frivolous to the more meaningful. Polka lessons? Private schools for the grandchildren? Fine by me. Let’s get all the possibilities on the table first and then we’ll look at the price tags.

What does money mean to you? That’s another question to consider and it is an important part of the initial planning sessions at TCI. Your answers will be very telling. Does money mean security, freedom or legacy? Or maybe it is a combination of all three. Your answers may be very different from those of your spouse, and that’s okay. Our goal is to create a plan that will meet both of your needs.

2. Be Honest

Maybe you have a weakness for jumping into the latest hot stock. Or maybe you are finding it hard to resist the seductive curves of that new sailboat you saw at the boat show now that you’ve cut back your hours at the office. Your financial plan isn’t going to be a straitjacket that strips all the fun out of your life. Instead, we’re going to set aside a reasonable amount of play money so you can indulge some of those impulses without derailing your retirement. Flexibility is the key.

Several years ago, I got a call from a longtime client, a highly successful executive who had recently retired with a well-structured plan in place. “Doug,” he announced. “I want to buy a ranch in Nevada.” I was stunned. His retirement plan had no margin  for  the hundreds of thousands of dollars it would cost to buy and maintain a ranch. I tried gently to dissuade him, but he was insistent. “Come and spend some time there with me and my wife,” he said.  “You’ll change your mind.”

So, I drove out to the ranch. I spent a couple of days with them, riding horses on dusty trails, crossing grassy meadows and sagebrush plains under a big bowl of blue sky. By the time I left, I’d changed my mind. I’d known my client for years. No golf game in my memory had ever given him the relaxed contentment that he’d gotten astride a sure-footed quarter horse. I realized the ranch didn’t make financial sense, but it enhanced my client’s quality of life immeasurably.  Back in the office the following week, I worked through the numbers and crafted a new plan. If he and his wife were willing to make some sacrifices on other expenditures, their new plan would enable them to buy the ranch. Which they did, with great joy.

Your relationship with your financial advisor will require a kind of radical honesty about your life, your health, and your family. Life can be complicated. So, too, are our families. And things change over time. If you have concerns about a financially reckless or immature child, even if that child is 40, I want to know. If you have a family history of heart disease or early-onset Alzheimer’s, I want to know that, too. These are difficult truths, but important to acknowledge and accommodate in your financial plan.

Our relationship is a no-judgement zone. I try to be equally open about my life, sharing some of the challenges I’ve faced over the years. Married at 20 while I was still in college, we were on such a tight budget that I was worriedly calculating the bill with every item we put in our cart on our weekly trip to the grocery store. I know what it means to count pennies, and I know how thrilling it is to enjoy an occasional splurge. As a young husband, mine was buying one bottle of craft beer at the grocery store. My wife got to pick out a magazine.

Over the years, I’ve learned that clients are pretty forthright about most issues, even the most sensitive family problems. Every now and then, though, I’m blindsided. The problem typically is hidden assets. And that’s stressful for me because I know in vivid detail what few clients know: the penalties can be very high for hiding assets from an ex-spouse, a business partner or the IRS.

Years ago, I was having a beer with a client at his kitchen table. Bill was an immigrant who’d built a successful construction business over thirty years in the U.S. He was a dirty- boots kind of builder who disdained debt, sloppy work and fancy offices. Thus, the kitchen-table conference. We were reviewing his assets when he said, gruffly, “You know about the account in Switzerland, don’t you?”

I choked on my beer, mid-swallow. Money in Switzerland? As a CPA, I was aware of the U.S. government’s ferocious crackdown on secret bank accounts. For decades, Americans could stash fortunes in certain foreign banks confident that their money was safe and hidden from the clutches of the IRS. Then, in 2008, the U.S. government went on the attack, suing banking giants in Switzerland, Israel and the Caribbean, and winning. Scores of individuals paid dearly in the next few years for their secret stashes. Some went to jail; others lost half the value of the money hidden in their foreign account.

I could feel my chest tightening, looking at my client and his innocently trusting wife. “Bill,” I said. “Times have changed. This could be a very big problem.” He scoffed at my concern. I begged him to reconsider. Stubbornly, he refused. Finally, I demanded that he fire me. In writing. Two weeks passed before he conceded, and reported the money to the IRS. Under the government amnesty program, he paid a hefty penalty, but avoided jail.

Why Bill hid money from the IRS is no mystery, but hiding assets from me, his financial advisor, is dangerous. Some clients don’t want to entrust all their assets to the care of a single wealth-management firm especially when new to the process. That’s understandable, if impractical. Other clients don’t want to admit to getting suckered into a bad deal by family or a frat buddy. But if there’s a failing fro-yo shop for which you co-signed the lease with your ne’er-do-well brother-in-law, I need to know about it. Remember: TCI’s aim is to create – and then tweak at every twist in the road – a financial plan that provides you with a sense of security and safety. Secrecy undermines our work. Secrecy increases the risk of a derailed retirement.

3. Ask Questions

Almost every new client comes to the first meeting with the same query.  What’s TCI’s historical rate of return on assets? That’s the wrong question. Just as every plan is unique, so is every portfolio. Younger clients during peak earning years with years to go before retirement may be more heavily invested in stocks. In a bull market, their portfolios will shine; in a severe bear market, their portfolios will suffer. Older clients are likely to be invested more conservatively. Their upside is more modest, but so is the downside during periods of market fluctuation.

With so many portfolios that are designed and managed to meet the various needs of so many different clients, an average rate of return is irrelevant.  What matters more is that you sleep well at night knowing your advisor is keeping a steadfast eye on your portfolio and your plan.

What are the important questions?

For one, ask your financial advisor how he or she gets paid. At TCI, the answer is quite simple; you pay us a fee based on the size of your portfolio. We make no money from commissions, kickbacks, promotions or residuals.   Unlike bankers, money managers or brokers, we do not make our money by selling you complicated things like annuities, individual muni bonds or limited partnerships. Ask questions, lots of questions:   When I’m feeling anxious about the stock market is it okay to call you? After some health challenges, my wife (or husband) is fretting about the plan; can you walk us through it again, so we feel more comfortable? The more communication between advisor and client the better. And all the answers should be plain and simple.

Like all relationships, the one you have with your financial advisor will take a while to develop. Trust is at the very core, and it is hard to earn. I know that and so does every advisor at TCI. So, take your time. Ask all the questions you want. What are those dreams of yours? I really want to know

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