How to Choose the Right Financial Advisor for You

James Bogart

Welcome to the Bogart Effect, a Wealthy Wisdom podcast. The following Bogart Effect podcast is intended for general information purposes only. The information discussed is no substitute for personalized investment advice from Bogart or another investment professional. Please see important disclosure information at the end of the presentation.

James Bogart

Hello, this is James Bogart, and today I have Jung with me. We’re going to be talking about how to find the right financial advisor for you. Yes. Thanks for joining today.

Jung Seh

You’re welcome. Thanks for having me.

James Bogart

This topic is near and dear to my heart.

Jung Seh

Absolutely.

James Bogart

Well, and it’s one that I think we get asked all the time, you know, what is it that we should be looking for in an advisor. How do you select I mean, now there’s over 18,000 advisory firms, well over 100,000 advisors that are registered with the SEC. How do you know the difference?

Jung Seh

Exactly.

James Bogart

So, I think the perfect way to start is let’s talk about the different types of advisors, because there’s lots of them out there. Right. So why don’t you tell me about some of the different types of advisors.

Jung Seh

Well, first of all, when you are looking for an advisor, yeah, you absolutely want to do your research and know exactly what the advisors do and how they get compensated. So, you know, whenever we are looking for professional or looking for a service, we want to know how they are going to get paid, right. So, some of the ways that advisors get paid, are there are ones that are fee only. So, what is fee only mean to you James?

James Bogart

Well, fee only is when the only way that they’re being compensated is typically either through an investment management fee or a consulting fee, both of which are clearly described, clearly aligned right from the beginning of the relationship. Now, I would compare that to someone who can sell commissionable products. And so, someone who could sell commissionable products, they’ve got their series seven, series six, or series 66 and 65. But ultimately, they’re brokers. Now we will see hybrids of the two where you have those that are fee only in one capacity, but also have their brokerage licenses where they can actually potentially have a conflict. And to me, this conversation comes back to being a fiduciary.

James Bogart

Now a lot of people say I’m a fiduciary, but I can also still sell you a commissionable product, like an insurance policy or an annuity or some type of long-term care program, etc. Well, coming back to your point, I think this whole conversation really is about how is someone being paid. And when we talk about being a true fiduciary, you know, what that means to me is that we’re ultimately completely aligned in terms of how the compensation is structured. I’m not incentivized to sell you something. Now, that doesn’t mean we can’t do it right.

James Bogart

I think about how we’ve built Bogart Wealth. We are fee only, true fiduciary advisors. We get paid for managing assets. Now, that doesn’t mean that it’s not appropriate for our customers to need, for example, a life insurance policy or, a long-term care policy or even an annuity. The way that we’ve structured it at Bogart Wealth is we have a third-party relationship where if that’s something that’s appropriate for our clients, we’ll bring that third party in, but there is no compensation for it.

James Bogart

Now, I’ve had colleagues in the industry say, well, you’re giving up a lot of revenue. Frankly, maybe. Maybe not. Right. But ultimately it comes down to doing what’s best for the client. And I personally think of this whole conversation of as soon as I understand how someone’s getting paid, I understand every incentive that they have, and we’re trying to be fully aligned on that.

James Bogart

Right? So, there’s fee-only advisors, there’s commission advisors, there’s RIAs, which I’m going to argue most RIAs are fee-only advisors right. Now some get paid for a flat consulting fee, where they just bill the hours of time that they work with. Some align with assets under management. Both of them are fee-only right. There’s nothing wrong with either of them. But then there’s robo-advisors. What are those?

Jung Seh

So robo-advisors are low cost, automated services. So, you pay for, it can be assets under management or you pay a flat fee, and but there’s no real person behind the service. It is automated and its computer generated. So that is what a robo-advisor is.

James Bogart

So, when we talk about what’s appropriate for your needs, what would you say is probably the best path of a household looking for that?

Jung Seh

I would absolutely start off by, you know, what we just talked about. Understand how an advisor gets paid. So, you talked about fiduciary. And I think that terminology is just gets thrown around too much these days. You know almost every firm out there, claims that there is fiduciary. But what does that really mean? And you’ve done a very good job at explaining that. And I like to take that a little bit further.

James Bogart

Let’s go.

Jung Seh

So, we are a registered investment advisor. We are a fiduciary, meaning that yes, just like you said, we don’t sell commission-based products, we don’t sell annuities, we don’t sell life insurances. All we do, how we make our money is purely assets under management. And we also, are subject to very stringent and very strict, rules and regulations by the SEC.

Jung Seh

So, we have to report, you know, we have to report a filing every year and every quarter. Yeah, I apologize, but you’re that’s why you do the CEO because, you know, you’re on top of the, all the mandates and rules and regulations.

James Bogart

And it’s actually even further than that. Right. So, it’s with the SEC. And then we’re also registered with every state that we have more than five customers. And, you know Bogart Wealth has been very blessed to grow a lot. you know, I was looking back six years ago, we were registered with five states, which means that we have more than five customers in those states. Now, we’re registered in 19 states. So, I mean, clients have just grown.

Jung Seh

That’s amazing.

James Bogart

With that, that means that we’re subject by to a surprise audit from every single one of those states. At any point in time. Which, of course, you know, there’s a regulatory component to that. but it’s important to understand, you know, that being an RIA, yes, we’re an independent entity. But that doesn’t mean that that we’re without oversight or guidance.

James Bogart

Because one of the misconceptions is I need to go to a big-name firm that has offices all over the country that has, you know, ultimately all the brokerage services and, the banking services and whatnot. But understand, it comes back to this conversation alignment, it comes back to how they’re being compensated, comes back to how that how you’re paying for things of that sort.

James Bogart

And frankly, in a lot of instances, it’s not necessarily what’s in your best interest. You know, I can speak to my previous life, I was at one of those firms and constantly fraught with conflict. you know, I I’ll never forget every month we had to go through and stop the firm from sending out credit card solicitations to our clients because we didn’t want to, have those types of solicitations go to our customer.

James Bogart

And actually, our compensation went down because we weren’t allowing the firm to solicit our clients with other products that they offered. Right. And so, this comes back to the understanding of when you see how someone’s being compensated, you understand exactly how there’s alignment. And this whole concept of being a true fiduciary. Well, why that’s so important is because it’s allowing us to completely sit on the same side of the table.

James Bogart

There is full alignment, no hidden agendas, no proprietary products, nothing that’s binding you to the firm. Like I tell you. For example, I have an investment product that, you know, ultimately that I invested in because I was doing it for my clients. I left that firm seven years ago. I still have it because it’s assets that are proprietary to them. it’s locked. In there. And I can’t move it. Which you know, I’m not saying it’s a bad investment. That’s not what I’m saying. But ultimately, it might not necessarily suit the needs of every client in perpetuity forever. And I like flexibility. Like, I want the ability for not delivering for whatever reason. It’s important to be able to move.

James Bogart

So, when I’m researching an advisor, I want to understand their background. What is the best way of going about doing that?

Jung Seh

So, when you’re looking for the background of an advisor, look up – there’s so many things that you can research on the internet, for, advisors that work for brokerage houses. You can look up, brokerage check and you can simply, type in their name and what state they work in. And it will come up with, it will populate any, adverse, you know, filings against them.

Jung Seh

It will report, whether or not they got let go by another firm, it will report any customer complaints. And, you can also look up the through the SEC website. You can look up your investment advisor. you can also look up if your planner is a certified financial planner, then you can go to the CFC

James Bogart

CFP Boards

Jung Seh

website and, right, and look through. It’ll report whether or not they’re in good standing, whether their license is up to date. and also, if they had a bankruptcy in the past ten years. So, I think doing your research and due diligence and, you know, the person that you’re going to be potentially working with that are some of the most intimate parts of their lives, I think, is so crucial.

James Bogart

I’m going to argue the most intimate.

Jung Seh

Yes.

James Bogart

No, and all great resources. And frankly, just because they have something doesn’t necessarily mean that they’re a bad person. Right? We’re not saying that. But it’s understanding that ultimately, why are they here? Why they are where they are. Now, I’m biased. At Bogart Wealth, not a single employee of the firm has any type of disciplinary history. And frankly, that’s one of the things we hire off of. We’ve missed a lot of really great human beings as part of our team because they have some history that ultimately, we’re not allowing within the firm.

Jung Seh

Yes.

James Bogart

You know, and again, I think it’s one point of perspective it’s important to research and understand, especially if you’re entering into this trust relationship.

Jung Seh

Yes, exactly.

James Bogart

So, one, I think that I’d like to, to spend a couple of minutes on is what are the designations of financial advisors. Right. we were talking a little bit about a week before we started. The proverbial alphabet soup of advisors. And you can see all the little, you know, designations and acronyms behind their names. But what are they? Right. I mean, and I think this is probably 25, 30, 40, 50 of these things now where it’s a company that sells some type of designation. What are the ones you need to look for? What are the ones that it really doesn’t matter?

Jung Seh

Oh my goodness, there are so many designations. Let’s see. There’s the CHFC, there is the AFA, there is the CLU, and then

James Bogart

CFA, CFP.

Jung Seh

Exactly. But when you’re looking for the right financial advisor, I think the certified financial planner designation is the gold standard.

James Bogart

I mean, that’s the CFP, right? Yes. Again, we’re biased, we’re both CFPs, but I would agree with you. Right. If you’re looking for a financial advisor that ultimately is going to be able to grow and satisfy all of the needs of a let’s just say aging and growing households, right? From education all the way through to retirement and beyond.

James Bogart

Certified financial planners are probably the gold standard. Right. So, and again, we’re biased. But I would tell you, if I’m looking for an advisor for myself or my family, they have to be a CFP. Yes. and tangentially right. I’ve had a lot of clients ask us, you know, what about the recommendations I made to my kids?

James Bogart

You know, they might not have access to CFPs or the ability to afford. Like, to me, I wouldn’t want anything less than that. Right. So, it’s one where I think it’s important to talk about those designations, what they actually mean, how much impact each of them actually has. you know, I probably actually I think at this point I carry two designations. I probably have a couple more that I could to keep behind my name. But then it gets to the point there’s more letters of designations than my name, so.

Jung Seh

Right, right.

James Bogart

It’s like why?

James Bogart

What about CFA? Right and this is one where I think a lot of clients say, well, don’t I want a CFA as my advisor? I personally think you want CFAs that are supporting the team that are on your advisors. But not necessarily really, not saying that they aren’t good advisors, but if I think about the growing needs of a house, you know, certified financial planners are helping with those moving elements. But the CFA is their core focus and concentration is on the investments.

Jung Seh

Yes.

James Bogart

Right. And you need those as part of the investment team for what’s available to you. But you don’t necessarily need a CFA as your primary point of contact. My personal opinion right.

Jung Seh

Yeah, I agree.

James Bogart

So, let’s talk a little bit about services. Right? I think every household has different needs. Right. And I think it’s important to make sure that as you’re interviewing the advisor, you’re getting your services and needs met. Talk to me about what types of services and advisory firms should be providing for their clients.

Jung Seh

I think it really comes down to what your needs are. So, you go through different stages in your life and you know you may be searching for an advisor because you want to do, some college planning, educational planning. You may have just inherited some money, and you want to know what to do with it. Or you’re planning for retirement.

Jung Seh

So, you start off by researching again, you know, who the advisors are, how they get compensated, and then start interviewing them on what your needs are and how they can best help you. So, I personally, I have a passion for financial planning, and as a fiduciary, I think that to always act in the best interest of the client we always have to start with comprehensive planning. So rather where if your needs are right now, you just want to, you know, see, okay, am I going to have enough saved to pay for my child’s education? Okay. Well, what about your retirement? Are your retirement needs going to be met because we got to take care of you before you go to take care of your kids’ education?

Jung Seh

Right. And you know, do you have all the proper planning in place? Do you have all the proper insurances in place? Insurance is not necessarily meaning policies, but you know, do you have the right protection in place to plan for the unexpected? Right. And, you know, and, and aligning that with what your goals and needs are. So, I, you know, going back regardless of what your needs are, I think having that as a part of a comprehensive conversation is so important.

James Bogart

So, I heard you mentioned financial planning. I heard you mentioned comprehensive needs-based planning. I’m going to add a few, right. And so, I think every, coming back to every household being different, their needs are different. The phases of life are different. I think first and foremost the plan is the epicenter. for every household, regardless of what age stage of life you’re in.

James Bogart

Because as you mentioned, education planning, insurance needs long term care planning, taking care of an elderly parent. Those are all things that that have not only a financial implication, but also an emotional one. And with having that baseline level plan, it’s so important, so. And again, I know we’re biased, but I would tell you, any advisor that you’re looking to hire our opinion is you need they need to be doing financial planning.

Jung Seh

Exactly.

James Bogart

If they’re not doing financial planning then, you know, frankly, I would just say it’s table stakes at this point. You need to. And how do you make a comprehensive recommendation on an investment perspective if you don’t know all of the different moving pieces of a portfolio? Now, beyond that, I think investments are very important. And being able to have an investment solution that is customized to your specific needs. You know, I think of Bogart Wealth. We’ve got clients from, from young children all the way up into their 90s.

James Bogart

I mean totally different perspectives. But having an investment solution that’s going to be customizable based upon the needs of each of our respective clients. Then I think about, you know, additional services. you talked about insurance, like being able to plan for the insurance needs. I would throw in there estate planning. That’s another one. Now, the advisor doesn’t necessarily have to prepare the documents, but they need to be able to talk to you about the implications of these things, which again, comes back to the plan.

James Bogart

I think of tax. Right. Tax is a very big part. and then I think about, you know, the ability to talk to you about things like trust services. And all of it at the end of the day, it really does come back to this comprehensive plan element. But these are things that as were interviewing an advisor, I think it’s important to talk to them about what are the services, what are the expectations?

James Bogart

You know I’m a big proponent in life, it’s about value creation. At the end of the day, you create value, and ultimately it will be a platform or conduit for any business relationship to thrive and regardless of the environment that we’re in. But it’s one where it’s very easy to get sensationalized. I mean I think about the difference between some of these wire houses versus an independent firm.

James Bogart

It’s like, yes, my bank can sell me a CD or they have an investment arm, etc., etc., etc. but coming back to some of the comments that we had before, are they doing the financial planning for me? How do they know that selling me that CD or that ETF or that mutual fund, whatever it is, is appropriate for my situation without looking at the baseline level of foundation?

Jung Seh

I think you bring up some really, really good points. So, you know, let’s say you do find an advisor, right? And you go in there, because you want to purchase a home and you want to know whether or not that’s a good fit for you in your life. But are they going to help you beyond that? You know, is that where they stop and how often are they going to check in with you? What are the services beyond what you need today? So, I think, you know, that that ongoing, conversation, you know, around okay. Now, you purchased a house. How does this fit into your overall plan? And, you know, now you want to start having kids. So, let’s talk about that. And, you know, so it’s a forever, evolving situation. And I think it’s so important to right the, to find the right person that are going to work with you along those changes.

James Bogart

Well, I’m going to say person and firm, right. It can’t be just one person. You need a team to be able to do that. You know. And I think recently we had a conversation at Bogart Wealth internally where our advisory board said, well, you guys are great at retirement. And I’m like, whoa, we do so much more than retirement.

James Bogart

What’s the value? And the question was, what’s the value past retirement? I’m like, well, it’s the planning. It’s the tax. It’s the estate planning. It’s the trust work. It’s the insurance. And then I think about the intergenerational wealth portion of our mission. Right. We’re helping your kids. We’re helping your parents. Yes. Like, it’s so much more than just a plan and some investments, right? Like it’s the ongoing integration of those value-oriented activities that really do, in my opinion, create a very successful long-term relationship with any household.

Jung Seh

Yes.

James Bogart

So, let’s talk a little bit about the process of how do you go about finding an advisor within your social circle. So, I think about like our client base, we grow 100% by referral. So, every client that’s come into the firm has been introduced to us by somebody else that is working with us. I think that’s an important thing to talk about.

James Bogart

When you start this process, you realize you do need an advisor or you want an advisor. And by the way, usually it’s a life event that’s, that’s triggering the need for an advisor. It might be a marriage, it might be a death, it might be inheritance, it might be retirement. Whatever that life event is typically, that’s what ultimately prompts someone thinking – sale of a business. Right? And don’t ignore that type of stuff. But that’s when you typically want to bring an advisor on board. I personally believe the best thing to do first and foremost is ask your friends, right? Like, who are they working with? And if they can make a recommendation that could be aligned with your needs, right? Like Bogart Wealth, we’ve built part of our business on being the subject matter experts within companies’ benefit programs. So, we know those benefit programs extremely well.

James Bogart

And yeah, I mean, it ultimately makes it to a point where we know there’s value specifically, we talked about this, at the retirement process, but I think there’s a heck of a lot more value that we’re delivering outside of that. But I mean, the comment that I’m going to make is that you really should look for a referral first before even going to internet search just right.

James Bogart

So, the reality of it is, is that, you know, you can have, search engine optimization and search and search engine marketing campaigns to elevate keywords and things of that sort. And don’t get me wrong, Bogart Wealth does that too. but the power of referral is beyond impactful, and especially if you can get experience shares from the people that you work with. Right. Anything else you would say in terms of like how to find an advisor beyond that?

Jung Seh

I agree with you 1,000%. So, when you’re looking for an advisor, you know, asking your friends for referrals, you want to go to who your friends trust, right? Who the circle in your life, who they trust to go to? When I’m looking for a, someone that, you know, where I need to share some very, very private information and know that I’m going to get the best help.

Jung Seh

I’m going to look to my friends. Right. so, you know, it’s one of those things where I don’t. We were just talking about this before we started this podcast. Like, you know, doctors, lawyers, you know, financial professionals, they’re not really the type of services that you can just Google and find, right? It’s by word of mouth.

Jung Seh

I want to go to who you trust because I know you and I trust you. So, I think that is absolutely the right way to go. And, and it can be daunting if you just do a Google web search, it can be daunting because everybody’s going to say they’re a fiduciary these days. And everyone’s going to say they act in your best interest.

Jung Seh

So, you know, how do you find that that that right person that is really going to meet your needs? And, you know, so I think I think that’s where you start. And if you don’t know anybody, then look for awards, right? Look for those firms that that are out there making a name for themselves that are growing and, you know, and putting their name out there because of all the good and value that they’re bringing to the industry.

James Bogart

That’s a great point. Yeah. We actually won a client recently because they’re unaffiliated to anything we’ve ever done. But it was because some of the awards that we had gotten. And they said we chose Bogart Wealth because Bogart Wealth likes to win. I thought that was pretty cool.

Jung Seh

And congratulations on your, top 40 under 40.

James Bogart

Thank you. Yeah. No, there’s certain ones that have like, I don’t want to say more meaning than others, but like, that was one that was very impactful. And I got a little bit more time left on that one.

Jung Seh

Kudos to you. Yeah. You worked hard for it.

James Bogart

So, let’s talk about the process. Let’s say now you’ve got your list. You got, you know, referrals from your friends and you’ve got let’s just say 3 or 4 names. How do you ultimately differentiate that list? Right. And, you know, I think of like our process, how we’ve built it, how we start introducing the firm. But again, even that, let’s say you’ve got 3 or 4 firms, they all seem great. How do you choose. Right. And so, I think it’s important every household, they shouldn’t just pick the first person to talk to you. Right. You really should have 2 or 3 more competitive friction right. However you want to describe it. But understand, you know, some of the key nuances that are going to be important to you and your family.

James Bogart

You know, like I think of if I’m hiring an advisor for my family, right. Where, yeah, professionally, I’m a little biased. I can do it myself. But the advisory firm that I would choose is really in place for my wife and my children. Right. And that, to me, is one of the most critical parts of the needs we talk about what are my needs. Right. And it’s I would say for me, I don’t necessarily need that sure. I would love to have somebody who’s going to give me another perspective, another viewpoint. But that doesn’t mean that I really want to just turn the keys over, right? Which that’s the case for a lot of our clients right?

James Bogart

But let’s talk a little bit about, you know, how do I get my needs met. How do I answer those questions? What’s that interview process look like?

Jung Seh

I think it’s just by sitting down in front of that person or virtually and having a conversation. you know, every personality has a different. Right? We all have different personalities. So, you know, have a conversation. Is it easy going? Do they fit my personality? Are they do they seem trustworthy? Do they have the right designations? and also, you know, do they offer the services that I’m looking for.

Jung Seh

So, I think it encompasses all of those things just sitting down, having a conversation and just trusting your gut instinct, you know, does this person jive with me? Do I get that, you know, that that sense where you know, where we’re going to be your right fit? Or are there red flags?

James Bogart

Well, and so what would some of those red flags be? All right. Let’s talk about that. You know, to me, I would have already researched them, I would have already seen disciplinary, if there is anything. This is where I think of soft skills, right? Like I read any professional we’re hiring, I look at how they interview my wife, right? Or they’re interacting with my wife. If it’s just me. Well, frankly, I’m not hiring them for me, right?

James Bogart

I’m hiring them for her. So, it’s to me, it’s just as important how they’re communicating with her as they are with me. Not with my kids at this point, they’re too young. But the point is, is like, it’s this is about the household, right? That’s a red that’s a huge red flag for me. If they’re immediately talking about products or something that is that they can sell me, I mean, this is coming back where you start to, unravel some of the, you know, different elements of the compensation model, right? That’s a red flag. Anything else?

Jung Seh

I mean, I perked up a little bit because this is like a part of a passion of mine when it comes to helping clients, right? I want to help them protect against all the bad people out there. So, some of the red flags that they should be looking for is how fast are you ready to move your money? If you’re in a hurry to get your assets and they’re giving you a timeline, I think that’s a big red flag. I think another big red flag that I do not like is fear mongering. Right? So, if they if, you know, if they suddenly start to try to convince you by scaring you, like, what if you died in a car accident tomorrow, what would your wife do? You know? Would you wife be okay? I think trying to get someone on board with fear, I I’m, I am not a fan of that.

James Bogart

I love that you said that because that’s just I mean, there’s sales coaches that train people to do things like that, and this is why I come back to this value creation conversation, right? Like comes back to you. If you’re creating value, you don’t need to do any of that. You’re not selling anything. Right. And you have belief and conviction in what you’re doing, and it becomes completely aligned. So, you know, our process. So, let’s talk a little bit about that, because I believe we don’t charge to bring a client through the planning process. And I use that as the opportunity to get to know us and get to know you, because at the end of the day this isn’t just us trying to win a client’s business. It has to be a partnership, both sides and if it’s not going to be a good fit either way, we should know early on. Now, personally, we spent a lot of money and time and energy and resources building out these plans because it gives us that opportunity and some would describe it as a loss leader, right. But it’s one where we’re able to demonstrate the value beyond just, an initial introductory conversation. And with not charging anything. It’s one where it’s like, well, what’s the barrier to do it? There shouldn’t be.

Jung Seh

We’re doing our due diligence to make sure that we’re a fit for on both sides.

James Bogart

And, you know, frankly, I think it’s you know, this is how I always frame it for expectations. But it’s look, if we’re delivering enough value, please tell your friends, but don’t keep us a secret. And that’s the compensation we receive along the way. Right. And when a referral is worth a thousand words, like we already talked about. Right. So being aligned in that regards.

James Bogart

So, we’ve talked a lot about what is the right advisor, how to find the right advisor. And I’m sure there’s more things.

Jung Seh

Oh gosh. I could go on and on and on.

James Bogart

But I really appreciate the time today.

Jung Seh

No thank you for having me.

James Bogart

Look forward to having you back.