American businessman and author of personal finance books Dave Ramsey talked about the biggest mistake people make when they are ready to choose a financial advisor.
For an individual seeking to hire their first financial advisor, it can be a daunting process when your knowledge of financial investments is next to nil and reading investor lingo is akin to interpreting ancient Egyptian hieroglyphics. Nonetheless, it’s the client who has the power since it’s his or her money being invested by the advisor.
Potentials client shouldn’t let a lack of knowledge regarding the nuances of investing and the financial markets allow them to feel inferior to the advisor, regardless of the advisor’s many industry accolades or total assets under management. Furthermore, potential clients should gain a level of understanding on how the advisor will be investing his or her capital.
Advisors Should Act Like Teachers
From the advisor’s perspective, Ramsey recommends that a teacher-student approach is necessary, particularly when meeting with prospective clients. A potential client may feel intimidated his or her lack of knowledge, but what they may really be seeking aside from capital growth is basic knowledge money management.
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