Focusing on the Right Financial Issues

Blocking out the noise

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Roger Wohlner

Recently, I received a phone call from a prospective client. On the surface, she sounded like a good prospect. She is in her mid 50s with a portfolio in excess of $2 million.

The reason for her call was primarily her displeasure with the way she was being treated by one of the major brokerage firms. During the course of the conversation, she mentioned that she might like me to attend a performance review meeting with her current broker. She also mentioned that the firm had requested that she move her accounts, likely the result of her walking into the firm’s offices demanding to speak with the president of the firm.

During the course of our conversation, the caller mentioned that she had no idea what she spends on an annual basis; she has never done a financial plan; and she has no asset allocation plan in place for her investments.

She also indicated that she had no reason to suspect any sort of foul play on the part of the broker. Nonetheless, she was obsessed with determining how much she was being charged and looking at trades for appropriateness.

Man budgeting with financial documents and calculator

When I suggested to her that she was asking good questions in terms of the broker but was focusing on the wrong issues, the conversation came to a quick end. It was clear to me that her anger with the brokerage firm was keeping her from focusing on the financial issues that really should matter to her. I suggested that her focus should be on finding a financial adviser with whom she was comfortable and basically starting over with a financial plan to drive her investment strategy. This was not what she wanted to hear, and she clearly was not someone who I would ever want as a client.

I would suggest to this caller and anyone that the appropriate course would be to focus on:

  • Defining and quantifying your financial goals in terms of a dollar amount and a timeframe.
  • Examining what you want your money to do for you.
  • Determining your tolerance for risk.
  • Looking at your existing financial resources and potential future savings in the context of your goals.
  • Getting a handle on your current spending.
  • In short, get a comprehensive financial plan in place. Should you decide to work with a professional financial adviser, I suggest that as part of the selection process you ask many questions, including his fees and the total cost of working with him, conflicts of interest, what you can expect to receive in return for your fees, and how often you will meet. It is always best to fully understand the terms of your relationship before moving forward.

    Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. Read more about Roger here.