Birmingham, Alabama-based financial guru Jeff Roberts, who was recently named one of the top private wealth advisors in the nation by Barron’s®, came on Yellowhammer Radio to lay out the facts so people can decide for themselves.
The full conversation with Mr. Roberts can be heard on the Yellowhammer Radio podcast or in the video above, and a lightly edited transcript of his interview with Yellowhammer’s Scott Beason can be read below.
Subscribe to the Yellowhammer Radio Podcast on iTunes. Learn more about Jeff Roberts’ private wealth advisory practice at JeffRobertsAndAssociates.com.
Scott:
What are we talking about today, Jeff?
Jeff:
You know how I base a lot of our conversations on things that I see with clients and new people that come into our office for the first time? This week we’re going to talk about something near and dear to my heart and that is the questions that you should ask if you’re sitting down and talking with a financial advisor. Particularly if you’re meeting with someone for the first time or maybe just things that you should know about your financial advisor. The reason I’m bringing this up is because signed with somebody in the last week that came in for the first time and in the last couple months they had met with somebody who had made some recommendations and they made some changes and did some stuff with their money and I was truly wondering whether it was in the clients best interest or not. I thinking to myself, “You know it’s maybe because people out there may not even know what to ask of their advisor to find out if they’re working with somebody that really is going to work for them.
Scott:
Hey Jeff, let me expand on that a little bit or tell you my personal experience a little bit. I’ve got family members who have had some financial planning in the past and I always get this friend who just started in the financial planning business and they call you, they call me, and they call everybody they know and say “Hey look I’m in the business now and I’d really like to talk to you about your retirement, etc. etc.” I know so little about financial planning because that’s just not my thing. I’ve always wondered this, I glad you’re bringing it up, what kind of questions do I ask? How do I know I’m actually talking with someone who has expertise in the field and didn’t just start doing it a couple weeks ago, and how do I know that they’re looking out for me first instead of themselves. Because I have experienced that.
Jeff:
It starts with just knowing some basic questions to ask and when in doubt talk to more than one person before you make a decision. We just had some folks that came in today and they had met with three other financials advisor firms and were referred to us and wanted to talk. I said, “Here is some criteria that you should be asking each one of us” so to speak. A good question to start with is, “How long have you been in the business?” It’s a very simple question, kind of like what you talked about a second ago. You’ve got friends that just started and they’re calling you up trying to build a book of business so to speak. But it’s more than just asking that question because sometimes you’ll get answers from people that have been in the “financial industry” or anything related to finance whatsoever and they’ll kind of consider that in the business so to speak.
Scott:
Right, “I’ve been in banking for 27 years because I ran the shredder in the basement.”
Jeff:
“I’ve just started advising clients last week.” The question really needs to be instead of “How long have you been in the business?”, “How many years of experience do you have advising clients at your firm?” Which is a more direct question. So you’re trying to find out how long have they been giving advise and then I would also in a separate question find out how long they have been at that particular firm which is important as well. I think probably another one to tackle on that same one too is, who is the company? Who do you work for? And often times it’s obvious as you’re walking into XYZ company you can see it on the door. People like myself, my team is Jeff Roberts and Associates but we are a franchise of Ameriprise Financial so our parent company is Ameriprise but we are a locally owned firm, Jeff Roberts and Associates which is important to know. Like asking how long we’ve been in business, well my company has been in business since 1992. We have 7 advisors on the team, varying in ages. We combined have 120 years of experience at Ameriprise giving advise to clients. I’ve worked with clients for 24 years here at this company giving advise to clients. So you’re looking obviously for some tenure and some experience, ideally people that have been through some crazy market and economic climates and know how to advise clients through each of those. I’d say another one that’s important and it really comes down to credentials. You could simply leave it at that, what credentials do you have? What you’ll often times find if you’re talking or see someone’s business card that’s a financial advisor, sometimes if you look after their name you’re going to see some initials. Like one mine there’s three sets of initials after mine and what these are called is professional designations. A professional designation is nothing more than the person that has a designation is an advisor that has spent some time studying a particular curriculum offered typically through a school that is specializing often in something about their career. Like if could be general financial planning, it could be estate planning, it could be tax planning, any number of retirement planning, it could be about a particular subject or a broad subject. And that curriculum involves typically anywhere from 30 to 40 to 80 hours potentially or more worth of studying and then a series of tests that someone has to complete in order to have that designation under their name or by their name.
Scott:
So should I just ask them? Hey, what are these designations behind your name, what does all this stuff mean?
Jeff:
First, find out if they have designations. Do you have any professional designations or do you have any credentials which would be important to ask. Let them tell you about their credentials, let them tell you about what those designations are. Now, let me back up a minute. To be fair, just because somebody has initials after their name does not mean by any means that they’re a wonderfully talented and ethical advisor. Quite frankly, in my 24 years of experience I’ve seen people that have initials after their names that I wouldn’t recommend a dog to. And then I know some advisors in this industry that don’t have any designations after their name that provide tremendous quality and incredible experience to their clients. So just because there is or isn’t initials so to speak doesn’t make that person good or bad but what it is to the consumer it’s information. It’s a piece to the puzzle. So if I have an advisor, for example in my case I have three designations that means on three different occasions I went through three different curriculums, studied, passed the series of examinations and tests and have CE credits that I have to obtain each and every year to maintain those designations. That sort of thing just speaks to the fact that advisor that you are working with has in fact taken time to advance their knowledge and their own craft which to me speaks volumes. And again, I’m a little proud of our team we’ve got certified financial advisors on staff, chartered financial consultants, certified fund specialists, we have a credit portfolio management advisors, a credited domestic partner advisors. We’ve got so many specializations it’s incredible which again it’s an important question to ask. I’d say if we’re going to throw in another one, a good question and this may be a little different than what some people expect I’d ask an advisor if I were looking for one myself, are you currently under some sort of sales or product quota with clients?
Scott:
See, that works into what I was thinking about was my question was I always want to know how are people getting paid? am I paying you up front, are you making a percentage off my investments, etc.? I think what you’re saying is very similar, are you on a quota system, does it matter more to you to sign me up than it does to do a good job for me?
Jeff:
What you’re talking about is what I’m going to get to because you’re exactly right. That should be asked as well as disclosed early on. The reason I’m asking this about quotas is because some “financial advisors” that have business cards that say that, are really pushing a particular product offering and that’s what happened in this particular example that really motivated this whole conversation with you today. Someone sat down with an advisor and trusted them with a lump sum of money that was their life’s savings and this advisor put them into one type of product that locked their money away for a 10 year period of time. There are advantages and disadvantages but when you take someones entire nest egg and lock it away for a 10 year period of time on a product, all of your money in that one product seems a little extreme. That tells me that person was probably selling a particular product for a living as opposed to giving sound advice. It’s rare that you would recommend something that’s long term with someone’s life savings. So I want to know what the incentive or motivation is from a product standpoint. With my team we do not have a product that we’re trying to place or recommend specifically to clients in any type of volume. We’re agnostic as to product. Although we do have goals as a team, we wan to grow as a practice and serve our clients in an increasing level but none of our goals are relevant to the types of products or services specifically that we’re offering our clients. Because to me that becomes unethical.
Scott:
You’re free to put me in to the plan that’s best for me instead the plan that fits your list of check boxes.
Jeff:
That’s exactly it. Another great question to ask is, hypothetically, if I wanted to buy one common stock, on company stock. If we’re going to buy XYZ stock can you advise me on that stock or can you literally purchase it for me as well? And the reason why that’s an important question to answer is because that begins to denoted the difference in licenses that people have. Some people might have a license where they’re only able to sell certain types of products verses people that can have a wider range of product offerings. We have a securities license that enables which is the broadest form of securities license and it allows us to be able to deal with many types of stocks, bonds, mutual funds, real estate investment, trusts, whatever is needed for our clients. And other advisors might not have that broad of a licensing therefore they can not offer a wider selection of solutions to clients. Again, important to ask that question. I think another one that’s important to ask is, who do I talk to if I can’t get in touch with you? That question is actually a little bit deeper than you think. It’s not just you’re out to lunch and who’s going to answer the phone and who’s going to take my call. Let’s take it a step further than that, what if the advisors on vacation? What if the advisor is injured or ill for an extended period of time or got run over by a bus? You know I like to run, I’m a jogger so if I’m out running and some car jumps the curb and runs me over who are my clients going to be working with? So on our team there are multiple advisors that would be able to pick up. Our goal moving forward in our practice is to make sure that our clients start to have deeper relationships with other advisors on our team so that they know more multiple people and have a relationship with multiple people.
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