12 Markers of an Excellent Financial Advisor

Final Edit

[00:00:00] Intro: Do you think money takes up more life space than it should? On this show, we discuss with and share stories from artists, authors, entrepreneurs, and advisors about how they mindfully minimize the time and energies. Spent thinking about money. Join your host, Jonathan DeYoe, and learn how to put money in its place and get more out of life.

[00:00:33] Jonathan DeYoe: Hey there. Welcome back to the Mindful Money Podcast. I am your host, Jonathan DeYoe. At the end of 2024, I promised you that, I would be starting in 2025. I would be spending some time just talking directly into the mic. I’m still gonna interview people for most of my episodes, but I also wanna pepper in some thoughts between those interviews throughout 2025.

[00:00:53] Jonathan DeYoe: And then at the end of the year, I’m gonna ask you what you think. Do you like this format? Do I have the balance right? Do you wanna hear more from me? Do you wanna hear more interviews? I’m gonna ask you like what, who do you want me to interview? Like what sorts of topics do you want us to cover?

[00:01:06] Jonathan DeYoe: This isn’t an ego thing for me. It’s a function of what I think needs to be said about financial services in general and about helping people get the advice and support that they need. No one told me it would happen this way, but once we hit the 100 episode threshold, we started getting bombarded with potential guests and I haven’t.

[00:01:24] Jonathan DeYoe: Heard it talked about, but what I discovered is that there are millions of people out there who are selling products, insurance, you know, real estate stuff, , private placements, et cetera. And I’ve personally read hundreds of claims of product benefits, , that sound wonderful, but aren’t real, or at least are painted in a very biased light, , during the presentations or during the interviews.

[00:01:44] Jonathan DeYoe: I’ve had to say no to literally hundreds of potential guests, and I have a long list of maybes people who aren’t doing any active harm, but who aren’t offering anything unique either. There’s just a lot of stuff out there that we wanna try to cut through.

[00:01:57] Jonathan DeYoe: We have two big goals and mindful [00:02:00] money. First, we want to provide access to excellent financial information that borders on advice.

[00:02:06] Jonathan DeYoe: Without being advice, because regulators frown on calling it advice when we don’t know somebody’s personal situation. So we wanna get really close to what we call advice, but we don’t want it to be advice. Second, we want to be one of the forces that pushes the industry to do more, , to enhance their services, to basically earn your business.

[00:02:25] Jonathan DeYoe: The reason I merged my firm into EP Wealth, well, one of the reasons. They’re one of the only firms I know that continue to do this well. They will admit that not everyone needs a financial advisor, especially where the advice is really just portfolio management. All the studies from Vanguard and Morningstar and Russell and others, they say that advisors provide tremendous value, but only a small part of that value is portfolio design or portfolio management.

[00:02:53] Jonathan DeYoe: If that is all your advisor is doing, then it’s probably not worth the fee you’re paying. You might be better [00:03:00] off with a digital advisor, what they used to call roboadvisors. So I joined EP Wealth because of their focus on financial planning as a core value. I. Since I’ve joined EP Wealth, we’ve , continued to expand the services.

[00:03:14] Jonathan DeYoe: We’ve added tax planning, we’ve added, , tax compliance. We actually coordinate the doing of your taxes. We’ve added estate planning. We actually coordinate and pay for your four core documents. , we’ve added trust services. These are all new services rolled out in the last three years at ep.

[00:03:28] Jonathan DeYoe: Wealth and more are coming. If you have a complex financial life, ep Wealth does amazing. Integrated and proactive work. I’d be happy to introduce you to a great advisor if you’re looking for a second opinion. Mindful Money is a heart-focused and mission-based organization where we specifically support folks who don’t feel like they have access, or who occasionally just need to get a question answered.

[00:03:53] Jonathan DeYoe: If you haven’t checked out our Financial Independence Bootcamp or the Mindful Money Membership, please do so. They’re the paid services that support this [00:04:00] podcast and keep it ad free. With that, I want to go on to today’s topic.

[00:04:05] Jonathan DeYoe: So in December of last year, I did an episode about whether or not you might want to have an advisor.

[00:04:10] Jonathan DeYoe: Now we ticked down some of the things that advisors can do to support you in the reach of your best life and some of the questions you should ask an advisors to see if they might understand, be able to understand your needs. Then we talked about the different types and sources of advice out there and how much they cost, and we ended with a 10 question, , survey for you to use when you’re interviewing potential advisors.

[00:04:32] Jonathan DeYoe: Today I want to introduce the sort of the next level of the same topic. Say you have an advisor and you just want to know their quality. I’m gonna introduce 12 markers of an excellent financial advisor.

[00:04:46] Jonathan DeYoe: So our question is, what defines an excellent financial advisor? If you ask five or 10 different people, you’d likely get five or 10 different answers.

[00:04:55] Jonathan DeYoe: However, when you ask thousands of people. Clear trends emerge much [00:05:00] like dimensional funds survey of 19,000 investors. These shared attributes give us a pretty clear idea of what separates a truly effective, what we’ll call excellent advisor from the rest. But why does it matter? So according to the survey, a client working with an excellent financial advisor enjoys peace of mind, makes continuous meaningful progress towards their financial goals.

[00:05:25] Jonathan DeYoe: Knows their advisor understands their personal financial situation deeply, oftentimes better than the client does and, and this is probably the most important piece, trusts their advisor’s guidance for no other reason than it is their advisor’s guidance. If you were going to an advisor and you always had to question or have to research the things that they say to make sure that they were, you know, , not selling you something or that’s not trust.

[00:05:51] Jonathan DeYoe: So imagine you’re working with somebody and they say, Hey, you should do this thing. It’ll optimize things for you and you just do the thing and you feel comfortable to thing and the thing works.

[00:05:59] Jonathan DeYoe: So let’s dive a little [00:06:00] deeper here. What qualities signal that you’re working with a truly skilled financial advisor?

[00:06:05] Jonathan DeYoe: These are some critical markers of excellence that you should look for. First, they’re gonna ask a lot of questions and they’re gonna ask the right questions. An excellent financial advisor takes time to ask questions and understand your entire financial picture before making any kinds of recommendations.

[00:06:22] Jonathan DeYoe: It’s not just about creating an investment portfolio based on a risk tolerance, , or a time horizon based on some kind of a, , questionnaire that you filled out. It’s about knowing your goals, your dreams, and your concerns. What are you trying to accomplish? What are you afraid might happen?

[00:06:40] Jonathan DeYoe: Your advisor should be more interested in learning about you than pushing a product or an investment. They should inquire about your financial priorities, debts you might have retirement goals and plans for your children’s education and even your legacy goals. If they don’t, it’s a red flag. Their focus should be on creating a plan that is tailored to you.

[00:06:59] Jonathan DeYoe: Not [00:07:00] fitting you into a preexisting mold. Financial planning done right is both science and art, and this is where excellent advisors shine. They don’t just fill in the blanks or use a one size fits all questionnaire. They dig deep to create a financial plan that reflects your unique circumstances and your deeply held values.

[00:07:19] Jonathan DeYoe: Second, they have a clear, transparent fee structure. Transparency is another hallmark of a great financial advisor. Whether they charge a flat fee and assets under management, often referred to as an A UM fee or a commission, you should be able to see how much you’re paying and understand what you’re paying for.

[00:07:40] Jonathan DeYoe: An excellent advisor doesn’t hide behind confusing terms. They lay out their compensation clearly, whether it’s tiered, if it’s fixed, if it’s retainer based, if it’s based on your account size or structured some other way. Be cautious of hidden fees, such as additional charges for specific exotic investment products like hedge funds or private placement, or [00:08:00] real estate funds.

[00:08:01] Jonathan DeYoe: These products often come with higher costs, and it’s your advisor’s job to explain any extra fees to you in clear, simple terms. Understanding the total cost of your relationship with an advisor is essential. Some may claim they don’t charge fees, but the financial products they recommend could come with hefty internal expenses or pay them commissions behind the scenes.

[00:08:22] Jonathan DeYoe: An excellent financial advisor ensures that you are fully aware of your total financial obligations, providing clarity and honesty at every step.

[00:08:31] Jonathan DeYoe: Third, they are not afraid to challenge you when necessary. If your advisor agrees with you all the time. What are you paying them for? The most valuable moments in the client advisor relationship often come when the client is about to make a bad decision.

[00:08:48] Jonathan DeYoe: An excellent financial advisor isn’t just a yes man or yes woman. They will push back kindly, but firmly when they see a client about to act against their long-term [00:09:00] best interests. Imagine this, you’ve got a well constructed financial plan in place that’s helping you save for retirement, maintain your lifestyle, and perhaps even save for a child’s education.

[00:09:10] Jonathan DeYoe: But then a tempting opportunity arises like buying a beach house. You call your advisor and tell them you’re thinking of liquidating half of your retirement savings to make this dream come true. An excellent advisor won’t say, great idea. Go for it without further conversation. Instead, they’re gonna ask you thoughtful, challenging questions.

[00:09:28] Jonathan DeYoe: They’ll ask you to consider the long-term consequences and how this purchase could derail your other financial goals. They aren’t there to discourage you, but to make sure every decision fits within the well-crafted financial plan you’ve developed. If it doesn’t fit within the plan, then you might wanna change the plan.

[00:09:47] Jonathan DeYoe: This quality, being willing to challenge clients is critical. Excellent advisors help clients avoid impulsive decisions, steering them back to the plan that was designed to [00:10:00] ensure their long-term success.

[00:10:02] Jonathan DeYoe: Fourth, they provide clear explanations of their investment process. One of the key indicators of an excellent financial advisor is their ability to explain their investing process clearly.

[00:10:13] Jonathan DeYoe: Do they have a structured approach to managing your funds? Can they break down complex strategies into language? You understand bonus points if it’s simple evidence-based approach. If your advisor uses a strategy like Modern Portfolio Theory, , often referred to as MPT. They should still be able to explain both what modern portfolio theory means in simple language, and they should be able to describe the rationale for the investments they’re choosing for you.

[00:10:43] Jonathan DeYoe: Most importantly, they should help you understand the role of planning driven asset allocation, diversification, and rebalancing. When you ask questions about these, they should be able to explain them in a way you can understand and you should feel comfortable asking them questions. In my opinion, they should calmly [00:11:00] and patiently remind you as often as necessary of the importance of sticking to your plan during market ups and downs, which are always unpredictable and always uncontrollable.

[00:11:09] Jonathan DeYoe: This is where great advisors can stand out. They help you stay focused when your instincts might tell you. To panic during market dips or conversely go all in on some hot trend like cryptocurrency or real estate. They’re there to be a steady hand on the wheel reminding you of the value of consistency and sticking to your long-term goals.

[00:11:28] Jonathan DeYoe: Fifth, they commit to continuous learning. In an industry that’s always evolving new financial products and changing regulations, an excellent financial advisor must . Commit to continuous education. Certifications like Certified Financial Planner or Chartered Financial Analyst are great indicators that an advisor is serious about staying at the top of their game.

[00:11:50] Jonathan DeYoe: These credentials reflect a deep understanding of financial planning and ethical standards. They also require continuing education every year, but beyond the certifications, your [00:12:00] advisor should be consistently up to date on the latest financial trends, regulations, and tools available. Continuous learning ensures that they can offer the most current and effective strategies tailored to your unique needs.

[00:12:11] Jonathan DeYoe: This commitment to education extends to understanding your evolving situation. An excellent advisor regularly revisits your financial plan to ensure it still aligns with your life changes. Whether it’s a job, change the birth of a child, or a shift in your retirement plans.

[00:12:29] Jonathan DeYoe: Sixth,

[00:12:30] Jonathan DeYoe: and we can’t put really too fine a point on this.

[00:12:33] Jonathan DeYoe: They have to be emotionally intelligent. Managing finances is not a numbers game. An excellent financial advisor must always have a high degree of emotional intelligence. Why? Because money is inherently emotional and clients often need . Guidance in navigating their feelings about finances, especially during those turbulent times.

[00:12:55] Jonathan DeYoe: Emotional intelligence is the foundation of advisor trust. We are emotional [00:13:00] creatures. As Maya Angelou said. , I’ve learned that people will forget what you’ve said. People forget what you did, but people will never forget how you made them feel. The path to helping clients make better decisions isn’t paved with rational proofs, but with emotional understanding.

[00:13:18] Jonathan DeYoe: A great financial advisor demonstrates empathy. They understand when you’re feeling anxious about market volatility or stressed about an unexpected financial burden. The excellent financial advisor acknowledges your feelings and helps you manage those emotions by offering thoughtful advice rooted in your financial plan.

[00:13:37] Jonathan DeYoe: You’ve often heard me say, whether it’s on the podcast or in, , in the newsletter. We planned for this. An excellent financial advisor. When met with something emotional, I. Can actually refer to the plan and say, we planned for this. This emotional intelligence allows them to connect on a deeper level, not just as a service provider, but as a [00:14:00] partner in the financial journey.

[00:14:01] Jonathan DeYoe: The best financial advisors guide you through both calm and stormy financial waters, providing a sense of reassurance and stability. There will come a time. When clients are called to do something that is uncomfortable, and the only reason they will do it is because they absolutely trust their advisor.

[00:14:20] Jonathan DeYoe: If you are seeking an advisor, you want nothing less than this level of trust.

[00:14:25] Jonathan DeYoe: Seventh, they have to have strong analytical skills and they’ve gotta be able to pay attention to details. Good financial advice requires more than just gut feelings. It requires analysis. An excellent financial advisor knows how to assess data, interpret financial reports, and use these insights to guide you towards making informed decisions.

[00:14:45] Jonathan DeYoe: Whether it’s analyzing the tax implications of selling a property, or evaluating the risk associated with a particular investment, a strong advisor uses data to help guide their recommendations. This analytical approach ensures that every decision is backed by sound [00:15:00] logic and not driven by market noise or emotional reactions.

[00:15:03] Jonathan DeYoe: When it comes to your financial future, the little things matter. An excellent financial advisor is meticulous, making sure that all your financial documents are in order, all the strategies are implemented correctly, and nothing is overlooked. Attention to detail is crucial in everything from rebalancing portfolios to ensuring that estate plans and tax strategies are executed correctly.

[00:15:24] Jonathan DeYoe: Even the smallest mistake could have significant financial repercussions and excellent advisors understand that precision is critical to avoiding costly errors.

[00:15:33] Jonathan DeYoe: Eighth, they excel in time management and organization. Handling multiple clients and portfolios requires excellent time management and organizational skills.

[00:15:45] Jonathan DeYoe: An excellent financial advisor prioritizes tasks effectively, ensuring that they’re always prepared for client meetings and financial reviews. They stay on top of changes in your financial life and proactively reach out when adjustments are needed. The best advisors [00:16:00] use systems such as client relationship management tools.

[00:16:04] Jonathan DeYoe: , CRM. You might know Salesforce to stay organized. This ensures they’re responsive to your needs and ready to address any concerns promptly. One very important element of time management is the combination of knowing your capacity and the ability to say no. Most advisors take on too many clients. I have absolutely been guilty of this.

[00:16:27] Jonathan DeYoe: You should feel free to ask questions like, how many clients do you work with, and how many more clients do you think you can handle?

[00:16:34] Jonathan DeYoe: Ninth, you want your advisor to have a strong professional network. No advisor can do it all. An excellent advisor builds a strong professional network that includes estate attorneys, tax specialists, insurance experts, and one hopes other advisors.

[00:16:50] Jonathan DeYoe: This allows them to offer you a well-rounded approach to financial planning, pulling in the right professionals when necessary, and introducing you to other financial advisors if your needs ever [00:17:00] change and veer outside their skillset, or if they ever run into the capacity issues that we’ve mentioned above.

[00:17:07] Jonathan DeYoe: Whether it’s helping you with estate planning or coordinating with an accountant during tax season, an advisor with a robust network can ensure that all aspects of your financial life are covered.

[00:17:18] Jonathan DeYoe: 10th, you want ’em to be proactive. Problem solvers, a great financial advisor, doesn’t wait for problems to arise.

[00:17:26] Jonathan DeYoe: They anticipate challenges and address them before they become bigger issues, for instance. If you’re going through a major life event like retirement or the birth of a child, an excellent advisor will proactively adjust your financial plan to accommodate these changes. Make recommendations on the path.

[00:17:41] Jonathan DeYoe: The point of your financial plan is to answer your financial questions within the context of your life. I. If you’ve got a big decision to make, the best financial advisors are gonna run. What if scenarios that turn your plan into a living, breathing document instead of a bunch of papers sitting on a shelf, they have to be [00:18:00] solution focused, helping you navigate challenges and making sure that your financial goals stay on track no matter what life throws your way.

[00:18:07] Jonathan DeYoe: 11th, they help you stick to your plan. This kind of goes with that emotional intelligence. One of the most important roles of a financial advisor is to help you remain focused on your long-term financial plan. It’s super easy and check yourself on this. It’s really easy to get swept up in short-term market fluctuations or emotional decisions, but an excellent advisor keeps a steady hand on the wheel helping you avoid knee jerk reactions that could harm your financial future.

[00:18:38] Jonathan DeYoe: They remind you of the goals you’ve set together and keep you on course through life’s inevitable twists and turns. Whether it’s during a market downturn or a personal financial challenge, like a job loss or the death of a spouse, they’ll help you stay committed to the plan that’s designed to achieve your long-term goals.

[00:18:56] Jonathan DeYoe: Remember, we planned for this

[00:18:58] Jonathan DeYoe: [00:19:00] 12th, they have to have a high client retention rate, and you can ask them directly about this. Client retention is one of the best markers of an excellent financial advisor. Happy clients stay and they refer their friends and family Advisors who maintain strong, long lasting relationships have demonstrated the ability to provide value consistently.

[00:19:21] Jonathan DeYoe: Over time. A high client retention rate suggest an advisor isn’t just competent. They’re excellent at building trust and delivering results. Satisfied clients are likely to refer others. Contributing to an advisor’s growth and long-term success.

[00:19:37] Jonathan DeYoe: So yes, technical skills are important and they’re both difficult to discern at the outset, and they’re only a starting point.

[00:19:46] Jonathan DeYoe: The qualities that define an excellent financial advisor go beyond technical skills. A good advisor isn’t just someone who knows how to create a financial plan. They’re someone who communicates clearly. Builds trust [00:20:00] and offers guidance that empowers you to make smart choices. They challenge you when necessary.

[00:20:06] Jonathan DeYoe: They explain complex ideas in simple terms, and they help you stay on track, especially when it’s difficult. Ultimately, an excellent financial advisor is a partner in your financial journey, providing the wisdom, patience, and discipline You need to stick to your plan and reach your long-term goals.

[00:20:23] Jonathan DeYoe: Especially when it’s hard to do so, especially when you’re on the cusp of doing something that might feel good in the moment, but hurt you in the long run. If your advisor demonstrates these qualities, you are in great hands. If not, it may be time to explore some other options if you’re interested. I’m happy to introduce you to somebody.

[00:20:41] Jonathan DeYoe: Thank you very much for listening. I look forward to returning to the interview format next week. If you haven’t, please subscribe and share The Mindful Money Podcast and review us@ratethispodcast.com slash mindful money and remember to tune in next week to the Mindful Money Podcast.

[00:20:57] Outro: [00:21:00] Thanks for listening. Full show notes for each episode, which includes a summary, key takeaways, quotes, and any resources mentioned are available at Mindful Money. Be sure to follow and subscribe wherever you listen to your favorite podcast. And if you’re enjoying the content and getting value from these episodes, please leave us a rating and review ratethispodcast.com/mindfulmoney. We’ll be sure to read those out on future episodes.