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Successful retirement investing takes teamwork. You and your spouse are the captains of your team. It’s your retirement, after all, and no one will care more about the outcome of your planning than you.
Playing an integral, but supporting, role on your team is your investment pro. Your pro is not the captain—they don’t call the shots. But that’s easy to forget when you’re working with someone who has more knowledge than you do on a complicated topic like retirement.
So we asked some investing professionals how to talk to a pro. If they were in your shoes, what questions would they ask? What red flags would they look for? And how would they know when they’re getting a sales pitch instead of solid investing recommendations?
They had some great insights and ideas you can use to make your retirement investing team even more effective. Keep these things in mind with your next (or first) meeting with your investing pro.
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Ask the Tough Questions
Ideally, your pro will be a part of your team for a long time, so it’s important to take some time to get to know each other.
"The first time we meet with a client, we don’t ever show them any recommended investments,” Chadd Hoeft, an investing professional in Omaha, NE, explained. “We don’t know who they are yet.” Instead, Chadd spends his first meeting with new clients asking questions and taking notes so he can make investing recommendations for them—at a later date.
(Here’s a bonus red-flag preview: If a professional shows you a package of investments “that’s perfect for you” right off the bat, that’s a strong indication that he has a one-size-fits-all approach to retirement. That’s not what you’re looking for.)
During this get-to-know-you time, ask some questions of your own. Ask tough questions. By watching the pro’s reactions and listening closely to their answers, you can get a pretty good read on the type of person you’re dealing with. Here are Chadd’s suggestions:
1. What does money mean to you? Obviously, you have a retirement investing goal you want to reach—that’s your first priority. But does your pro think the point of wealth-building is to have the biggest bank account in town or to buy the most expensive home? Or do they see it as a tool to care for your family as well as other people? It’s important that your pro’s philosophy lines up with yours.
2. How are you paid? “We feel like there’s a lot of gray area in our business surrounding fees,” Justin Widick, also an investing pro in Omaha, said. “We never apologize for being compensated, but we think it’s only fair that everyone understands how it works.” Investing fees and commissions are complicated, so if you don’t understand the pro's explanation, keep asking questions until you do. A good professional wants you to understand what your money is paying for and will take the time to make sure it’s crystal clear to you.
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3. What value do you bring to this team? A good investing pro will use their time, knowledge and interest to help their clients succeed, Chadd said. But clients also find value in the consistency of having someone come alongside them and encourage them to keep working toward their goals. And since retirement investing is a long-term project, having a professional help you evaluate your progress and then help you stay on track or get back on track is essential. If they start talking about guaranteed return, giving you exclusive access to the “best” mutual funds or promising services for free, see the section below on red flags.
Red Flags: How to Spot a Sales Job
A smart investing professional will know what answers you’ll want to hear to the questions you ask, and if they are also a good salesman, they’ll tell you what you want to hear. It’s up to you to know if you’re dealing with a great salesperson or an honest professional. Here’s what Chadd, Justin and Brant Spessardt, an investing pro in Raleigh, NC, said to look out for:
Anything less than straightforwardness: A quality investing professional will want you to ask questions—lots of them. So if a potential pro dodges your questions, doesn’t give you direct answers, or hems and haws his answers, you should keep looking.
Anything “free,” “perfect” or “ the best”: It’s one thing for a pro to assure you that they are recommending good investments for your retirement, but if they focus on “no up-front costs” or claim this is “the best” investment out there right now, you’re probably on the receiving end of a high-pressure sales job. Thank them for their time and keep looking.
You just have a weird feeling: It’s important that you like your investing pro as a person. “Ask yourself, if something happens to me, do I want this person working with my spouse and family during a terrible time in their lives?” Brant said. If your gut says no, keep looking.