One of my early mentors used to warn that there was no such thing as a renaissance advisor. He recognized that the breadth and depth of issues contained within personal financial planning (back in the mid 1980s) were simply too complex for anyone to master each and every detail. Things have become even more complicated during the ensuing years.

The Search for “Fool’s Gold”

Oftentimes, we see prospective clients who think they know all the angles, tricks and strategies to make the markets work in their favor. Most of these strategies might be called “fool’s gold,” something with a shiny surface but nothing much underneath. Just because an investment or strategy is complex does not make it good. Just because it is poorly understood does not make it desirable. The overly obtuse mortgage investments in the run-up to the 2008 financial crisis provide an excellent example. Many “sophisticated” investors and their advisors were caught totally flat-footed by these byzantine products that very few fully comprehended.

Run, Don’t Walk

Traditional financial services firms are very skilled at creating and marketing packaged investment products with the “shiny surface.” In reality, most of these are complicated by design so that investors just can’t truly unravel all of the minute details. This lack of transparency should be a telltale sign to run, not walk in the opposite direction.

You should anticipate and expect competence about the markets and application of overall strategies from your advisor. You should not expect a renaissance advisor who spouts knowledge about everything possible. If you come upon one of these, just as in the previous example, run don’t walk away.

There are some fields of endeavor where technical skills are all that are needed. Personal financial planning is certainly not one of those. Advisors need general technical competency AND good communication skills. One without the other is of limited value. Don’t look for an advisor who is all knowing, but instead one who is able to provide un-conflicted advice about your key concerns. Ready for a real conversation?

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