Do You Need a Financial Advisor?

MARK RIEPE: Thanks to the Netflix show Drive to Survive, one of my kids has turned into a massive F1 fan. For older listeners, F1 is the name of the auto-racing series that used to be called Formula 1.

If you haven't seen an F1 race, imagine cars that look like real-life Batmobiles going 180 miles per hour on a straightaway while still being able to navigate hairpin turns.

My kid is a cord-cutter when it comes to cable TV, which means that she's too cheap to pay for ESPN and asks me to record the F1 race every Sunday, and then she comes over to watch.

Last Sunday, we were watching the race and stumbled into a conversation about who invented the car. It's a surprisingly complex question because it requires you to define what it is that you mean by a car.

For example, the Duryea brothers built the Duryea Motor Wagon in 1893, and it won the first American race in 1895, from Chicago to Evanston, Illinois, and back.[1]

Ransom E. Olds, of Oldsmobile fame, invented a one-cylinder, three-horsepower motorized horse buggy in 1901,[2] but after looking at some pictures, I'm not sure it or the Motor Wagon really qualifies as a car.

Collette of the Financial Decoder team, who looked into this issue in depth, says that the first internal-combustion automobile, the first real car as we would know it, was invented in 1901. It was a Mercedes, designed by Wilhelm Maybach in Germany. It had a 35-horsepower engine and a top speed of 53 miles per hour.

I trust Colette's judgment on this because she's one of the few people on the Financial Decoder team who could remember having changed the oil on her car by herself. So that makes her fully qualified to be our car-history expert.

By 1909, we've got Henry Ford who made the Model T and its assembly line, making cars more affordable, and the automotive industry took off from there.

I'm Mark Riepe, and this is Financial Decoder, an original podcast from Charles Schwab. It's a show about financial decision-making and the cognitive and emotional biases that can cloud our judgment.

The reason for all this car history is that for 80 years or so most car parts were completely mechanical. As in, everything was done with moving parts. And you could fix those parts using the kind of standard tools you might have in your toolbox in your garage.³

Starting in the 1980s, computer technology started to be embedded within cars, and the industry hasn't looked back.[3] Case in point, a Tesla's onboard AI chip is smarter than what you would find on an F-35 fighter jet, and it has 150 million times more computing power.[4]

What's got left behind is the ability of most regular people to fix their car. Not only can you probably not fix your car yourself anymore, you might not even know what's wrong with it.  

I suspect some people think about their financial life in the same way as their car. If you keep things simple, then it's possible to do it yourself. 

But the industry is more complex, as the number of financial products has increased.

There are so many more ways to invest now than 50 years ago when Schwab, the company, was founded. Today it's easy to invest in securities and markets across the globe. And you can do so using a wide range of investment products, including stocks, bonds, ETFs, mutual funds, commodities, futures, foreign currencies, and real estate, to name a few. 

It's a lot for the average investor to take in. So while investing is easier than ever in some ways because of technology—you can press a button and move money fast—it's also more challenging because of all the opportunities that are available thanks to the democratization of financial markets.

Like the mechanic who now uses a laptop more than a crescent wrench, investors have to develop a new set of skills. But not everyone has the time, the expertise, or even the interest. It's one thing to know that something is important in your life, but that doesn't mean you want to jump in and get super hands-on with it yourself.

If that's you, and you need to go looking for help with your financial life, then that's what this episode is about: How do you go about looking for a financial advisor? It's really a matter of preference—what if you really enjoy doing it yourself? If you're not doing anything complicated, do you need an advisor at all? How do you choose an advisor who can help you pursue your financial goals? We'll go through these and a bunch of other questions in this episode with Bryan Olson.

Bryan Olson is the head of Investor Advice Solutions at Schwab and president of Schwab Wealth Advisory. Bryan leads the client-facing teams providing wealth management and advice solutions for Schwab Wealth Advisory™, the Wealth Strategies Group, and the Wealth Management Services and Operations Group. His team advises on and supports more than $170 billion of client assets.

Bryan, thanks for being here today.

BRYAN OLSON: Thank you, Mark.

MARK: Bryan, before we get into the details of the decision of working—how to work with a financial advisor, whether to get a financial advisor in the first place—maybe let's just start off with, tell me a little bit about how you got into the business. Is this something you always wanted to work in—investments and finance? Or is this something that you evolved to over time?

BRYAN: I've been doing it so long now, over 30 years, it's hard to remember back when I first made that decision. But no, it wasn't always my interest. I actually had pursued physical therapy very young in my life when going to college. And then along the way, took some science classes, and realized I liked the quantitative aspects of certain things and sort of stumbled onto finance—mainly because of the quantitative nature of it, but then I realized that, "Wow, you can really make a difference in a person's life." And that really sort of cemented my interest in staying in the field for basically the next 30 years and hopefully many more to come.

MARK: Yeah, very good. Very good. I didn't know that about the physical therapy. That's interesting.

Let's kind of get into this advisor decision. There, you know, just top of my head, there are probably two main reasons to look for an advisor—either you don't have one and you'd like to get one; or you have one, but for whatever reason, you're not happy with them, and you're looking to get another one. Let's start with the first reason. Just on a basic level, why does someone even need a financial advisor? What are the circumstances that make getting a financial advisor a good idea?

BRYAN: Well, I mean, it's basically anyone who wants to improve their financial well-being, and they need that expert help. We often see it manifest itself in several different ways—time, interest, and expertise. So in many cases, somebody, they don't have the time, and they just say, "I do not … I'm a busy executive, or I have a career, or I have children," or whatever the case may be, and they just need the help to alleviate the time pressure that they might have.

The other is interest, and we find this goes both ways. Either, "I have no interest. I find no enjoyment in this whatsoever, so I want somebody to help me do it or do it for me." Or, "I have an interest in it. I want to learn more. Please help bring me along and educate me."

And then the last one is expertise. They just don't know about the markets. They don't know about financial planning—just like in any area of your life that you might seek out experts, whether that's medical, building something, getting your car repaired. Often we just don't have the expertise we need to do it ourselves, so we seek out an expert.

MARK: Those are great examples, and I think one mistake that people make when they start a search to hire someone for a task is they haven't really taken the time to really think through what it is they want from the person they're going to hire.

So in the financial advisor context—what should they really be thinking about? What questions should they be asking really of themselves before they start doing that search?

BRYAN: That's a great question because most people don't do that pre-work, and it often comes back to haunt them in the relationship with the advisor—and it's some self-reflection. What is it you're trying to accomplish? What life stage are you in? What is the complexity of your situation? And people often associate that with just pure wealth, but it's not. Complexity of situation can come from wealth. Also can come from family situation, what your goals are, and that's what you really have to ask yourself too. "What am I truly trying to accomplish?" Is it saving for education? Is it a home? Is it retirement planning? Is it a gifting strategy? And an advisor can help you refine and prioritize some of those, but if you don't have a fairly good sense of that walking in, it will be hard to, you know, get the most out of an advisor relationship.

MARK: Yeah, it's hard to have someone help you with a problem if you can't articulate what that problem is.

BRYAN: Absolutely.

MARK: So now that, let's say they've gone through that pre-work as you described it. They've got a sense as to what they're trying to accomplish with the advisor. How do they get started with the actual search process? Are there resources available? Is this just a word-of-mouth game? What's your experience in that area?

BRYAN: Well, word-of-mouth is great because it is such a personal relationship in many cases that if you know somebody who's worked with an advisor, a great place to start.

Our industry has evolved quite a bit over the last several decades, and most major firms, Schwab included, have great educational resources on thinking about an advisor, thinking about the relationship, and then on the actual advisor themselves. There are also other places one can go to find their … the biography, the philosophy of the firm, all of those items. There's also some industry regulatory bodies that have produced information, one being BrokerCheck, all one word. If you want to look it up on the web, it's a site that's maintained by FINRA, which is the Financial Industry Regulatory Authority. And you can look up an advisor by name and get their bio, their education, the licenses they have, any disciplinary action that's been taken against them.

There's also other industry-type organizations. The Certified Financial Planner Board also has resources where you can put in your city, your location, and it will list people who have the CFP® designation, which I think we'll cover a bit later, which is CERTIFIED FINANCIAL PLANNER™.

So there's a wealth of resources. Some of it, because of the personalized nature of the relationship, I suggest doing some shopping, going in and talking to these firms and seeing what resonates with you, whether it's firm philosophy or communication style and frequency of that.

MARK: I think that you're right. We're going to get to designations and that kind of stuff in a second. But before we go there, you started listing some things to look into for the advisor themselves. Most firms, you know, they've got websites. And a lot of people, of course, they check out that website before they actually do that in-person meeting. So what would you look for on a website? What kind of things should a potential client be looking for?

BRYAN: I think at the highest level would be philosophy and process. Does the firm have a philosophy that resonates with you, that you believe in, and do they have a process, a well-articulated, laid-out process? A lot of the advice you're going to get should be driven by an underlying process, and you need to understand that and know what it is and all the steps involved.

Then when you get to the actual advisor themselves—things like you'd normally look for in any sort of service provider: What is their biography? What is their level of education? What are their professional designations beyond their education that they may have sought out? Another one is what type of clients do they have? Do they have clients that are similar to you? Is the program designed for somebody in your situation? So those are a few things I'd consider.

MARK: You mentioned certifications and designations as part of the kind of the educational process that the advisor has gone through. What are some of the more popular ones and what do they indicate, if anything, about the advisor in question?

BRYAN: Well, there are many out there. There's been a bit of a proliferation of them. I mentioned the FINRA self-regulatory authority site. They actually have a long list of all the designations, and you can click through them, and it'll tell you a little bit about what they are.

But a few of the biggies are Chartered Financial Analyst®. That's a little more focused on investments and investment analysis, and often you'll see it designated with the three letters CFA®, Chartered Financial Analyst.

Another biggie that's out there and well respected is the Certified Financial Planner that I had mentioned earlier. And that's often seen with CFP after somebody's name. So that's another one. It's a bit broader in the wealth/financial planning space—so beyond investments and things like estate planning, insurance, banking, things like that.

There's also the Certified Wealth Strategist®, CWS®—you'll see many people have. Again, mainly about broader things than just investments, but more wealth-related items.

And then you have traditional, like the CPA, Certified Public Accountant—again, more focused for individual on taxes and preparing of taxes. But those are a few of the big ones and more well-respected.

MARK: So, at the end of the day, certifications, designations, their educational background, that's really about what the advisor knows. But in my opinion, when it comes to financial matters, it's also really important to have a good relationship with the person you're working with.

So how important is that from your standpoint? How important is it to have that comfort level, both kind of personally and professionally? How do you determine if it's a good fit? Is it just a gut feeling? Are there any red flags that people should be looking for when they actually start having in-person meetings with that potential advisor?

BRYAN: There is a bit of a gut feel on some of this because it's going to be a process that's so dominated by personal communication between you and your advisor. There has to be a sense of comfort with them and their communication style. I mean, you're going to reveal things about your life that you probably revealed to very few others, and it's necessary, and you have to. So there is a level of comfort you're going to have to have. Call it what you will—gut feeling, I would say.

But I also want to go back to—they need to have a philosophy and a process that resonates with you. Again, hopefully they're going to lean on that process over and over and over, so it should be something that resonates with you.

You mentioned red flags. This is where I go back to process. If they talk more about product than process, that's a red flag in my mind. That means they may be more focused on selling products to you than helping you with your broader financial situation and progress towards a goal. And so when you think about someone's process, it should be all around your goals and helping you achieve those goals and also willingness to meet your style where you are. I mean that, that might be frequency, that may be type of communication. Is it emails, a phone call, is it video calls? All of those things sort of go into the mix.

And personality, again, I mentioned that earlier, but you have to remember—there are going to be many emotional sort of checkpoints along the way. And you need to be able to resonate with that advisor, and hopefully they will push back on you occasionally, and you have to be comfortable with that. If you're taking too much risk or not enough risk, or the market's going down and you feel a sense of panic—that's going to be your hopefully emotional checkpoint and gauge in many ways to help you through those tough times.

MARK: Bryan I've been using this term "financial advisor." It's kind of a … I think it's a vague term probably to most of our listeners. It's kind of a broad term that covers a lot of different types of people who are providing financial services.

How does the potential investor, the potential client—how do they know if they need, for example, somebody more focused on the money management side of things, or somebody more focused on the financial planning side, or wealth management? Given that people, as you mentioned, they sometimes specialize in particular areas.

BRYAN: Yeah, I'm so thankful you brought that up, Mark. I should have probably mentioned that earlier when you're evaluating a firm. It's important to understand the roles of the various individuals who you might engage with at that firm. And it's often more than one. In almost every case, it will be more than one. It could be a relationship manager who helps you access the resources of that firm. It could be, as you mentioned, a financial planner. It could be a money manager.

So this is where that self-reflection comes back in. What are you trying to accomplish with seeking out this help? And then who should you seek it from? If it's purely just "make some investments," then maybe to your point, it's a money manager who would do nothing but focus on the investments. We find that most individuals need more than that. I mean, if you're an institution and you're just investing a pool of money, then fine—a money manager or a pure portfolio manager might be the route to go. But most individuals, they have other areas of their life that involve their financial situation where they may need help, whether that's banking, credit, risk, insurance, retirement planning—you'll need somebody who either serves a broader role or has access to experts in those various areas that can help you out.

MARK: Yeah, there's no one person who's going to know everything about every topic. And so taking advantage of those specialists and firms that have those specialists, I think, is a great idea.

I want to talk a little bit about compensation because I think that's another key question that anybody should be asking. They should understand how the firm they're working with is getting paid. So tell me a little bit about what are the different types of compensations, different types of compensation—what do those terms mean and is one really preferable over the other or what's most important is that you just understand them?

BRYAN: I think that you've hit on it right there. It's just most important that you understand the ways you are paying for what you're getting. There are several main types of compensation. One is fee-based, which is generally a percentage of assets that you have invested with that firm, and it will charge often somewhere around 1% is sort of common across the industry—some a little higher, some a little lower. There are other subscription-type arrangements where you pay a monthly fee or a flat fee for the year that are out there.

And then the third, and the one probably to be most careful of, is product-based fees or commissions where there's income earned by the provider based on what products they've sold to you or they've used in your plan. Again, can be OK, but just need to keep an eye on that one, in particular. But again, back to where you started. Most important is understanding how, because in many cases there are different layers of fees. There might be an underlying product fee. There might be a fee for the advisor himself and the time they put into it. So understanding how and how much in total that equates to.

MARK: So let's move ahead a little bit. The investor, the client, is now working with an advisor. They're getting advice. They're getting recommendations. How does that client evaluate whether that advice—whether it's about portfolios or the wealth management-type topics—how do they evaluate the usefulness of the advice they're getting?

BRYAN: Well, number one, it should be helping you progress towards your goal. Again, usually that should start with a plan or a roadmap for you. So, if you don't have that roadmap, how will you know if you're progressing towards that goal? So you should have a clear picture of, "OK, what is my goal? What is my horizon, time horizon, to get to that goal? And is my advisor sharing the progress along the way?"

Now, it's not always positive progress. Obviously, this involves investing, which does carry risk. And so you need to evaluate over an appropriate timeframe. And that's usually not months and quarters—it's in years—to take out some of the randomness and the risk in the market itself. And you should get a report of that, a literal report that shows your performance versus a common benchmark of the markets so you can weigh the relative success or not. And it should ideally come with a financial plan that literally shows the dollar progress that you're making towards that ultimate goal, whatever it may be, again, education, saving for retirement.

And that advisor—this goes back to where we started when beginning your work with an advisor—ask them for a sample. "Let me see what you will provide to me. Does it take the form of a financial plan? Will it show me my odds of success? Will it show me my performance against common benchmarks?" And take a look at that. You don't want to learn that well into the relationship. You want to see it upfront. But then on an ongoing basis, I know Schwab Wealth Advisory™, you mentioned the program I work in, we have quarterly reports we share with our clients. We have financial plans that we generally update once a year and show them the progress and the odds of success they have in achieving that goal. So those are a few ways that somebody should be looking for.

MARK: I've mentioned to people in the past that advisors—they're neither miracle workers nor mind readers. I thought we could talk about both of those characterizations because I think if people understand that, they can work with their advisor better. So what, on the miracle worker part of that—what misconceptions do clients have about what an advisor can and can't do to improve the financial situation of their clients?

BRYAN: That's a great question. I know, as a listener of your podcast, I know you like to focus on some of the behavioral tendencies of individuals and the field of behavioral finance. So—important to consider and think through what they cannot control is the outcome of the markets. And many people think, "Oh, I'll find the advisor who will get me some outsized returns, and that will be my secret to meeting my goals." And that is nearly impossible. If somebody is boastful, that is a red flag right there, as we mentioned earlier. If you're looking for red flags, somebody who's boasting about achieving outsized returns should be a warning sign right there.

But what they can control is developing a plan. You know, accumulating, you know, all your information so you know where you're starting, you know, which many people have never done an inventory of, "what do I have?" So they'll help you get that inventory done. They'll, you know, estimate, OK, what you need to save, how long you need to let it compound to achieve that goal so they can control creating a plan, which is so, so important—so you have that roadmap of where you're headed.

The other thing that the advisor has control over is risk—determining the risk level you're comfortable with and that's appropriate for your plan and then using investments and diversification to control that risk. Now, not precisely, but get it in the ballpark so that you stay with that plan. An advisor has much more control when they're developing your plan and especially your portfolio on the risk aspect of it.

The return is going to be dictated by the market, which we all know there are lots of ups and downs along the way, so controlling the risk and ideally, as I mentioned earlier, that emotional checkpoint, your reaction to that risk in the market and ideally serving as that counsel and keeping you invested in many cases, but keeping you following your plan.

MARK: I mentioned mind-reader, and part of the reason for that—it really kind of goes back to what you were talking about at the beginning about doing that pre-work to figure out kind of who you are and what you're trying to accomplish. The reason I mention that is that the advisor really can't help you if they don't know what's going on with you as a client. So what are some situations that you see where clients don't always do a good job of communicating with the advisor?

BRYAN: Some of it's the inventory I mentioned. What are all of the assets that you have or might expect to have from other family members? So getting that—I mean, a key starting point is where are you starting from? Many people are, you know, they're just not used to it. It's not something we discuss openly in life and many times weren't raised that way. So it feels very personal and very revealing when you're telling an advisor where all these assets are held or, you know, other family members who might pass away and you might inherit.

So you have to just have a level of openness with that advisor of what you have, but also your personal life situation. I mean, these things have a big impact on your finances, i.e., divorce, health issues, death, planning for it. Again, some conversations that can be very uncomfortable and we're not used to having. But if you want long-term success, that's the type of information your advisor needs to be aware of.

MARK: I'll throw in one more, which is admitting you didn't understand what the advisor was just telling you. You know, be willing to—if they've explained something and there was too much industry jargon in there, just say, "Hey, can you run that by me again in simpler language so that I get it?"

BRYAN: I totally agree with that. This industry is loaded with jargon. At Schwab, we have the saying "Own your tomorrow." We want you involved. We want you engaged. We think it is partly an educational process. And we find our best clients who stay with us for the longest and achieve their goals by following that plan are those that are well-informed, are pushing back on us, asking us questions. So I couldn't agree more. You have to be engaged with your own plan. You cannot farm it out to a third party, even the most expert advisor, and think you're going to have success. You need to play a part in your own plan.

MARK: Bryan, earlier you mentioned biases, and as people know, if they're listening to this, we tend to focus from time to time on cognitive and emotional decision-making biases. So Bryan, what are some of the biases that commonly crop up on the part of investors when they're working with the advisor? What are some of the things that kind of get in the way of that being a fruitful relationship?

BRYAN: Yeah, there are several that come to mind. And it can affect both the investor, the client, or the advisor himself or herself. So maybe the first one I'll start with is overconfidence. I know you and I had done some work on a few of these earlier in our careers. And it's believed to be Confucius who came up with "The definition of knowledge is knowing what we don't know." And so, as humans, we're optimists and we're often overconfident and not seeking out what we may not know. In many cases, that's risk, risk of the market, having too rosy of a picture in your mind of what's going to happen. Again, the advisor can fall prey to the same overconfidence. And that's why I mentioned earlier, the boastful statements should be a red flag and a warning and maybe a warning the advisor is overconfident, but overconfidence is one. And that one you just need to understand the odds of success you might have and be realistic about, you know—this is where education and history of the markets and the advisor can help you with that.

Another one we already touched on—illusion of control. You know, the advisor only has control over so many things. And again, in investing there's a level of randomness to it. So making sure you understand what you control, which I would argue is, you know, focus on the risk and the risk in the portfolio, not the return.

One of my favorite, and one I see our clients fall most prey to, is one we call the availability heuristic. And that is decisions based off of what's most readily available in your mind. And usually that's what just happened in the market. You know, for example, 2022, we had a relatively bad market, bear market, you know, negative, you know, double-digit negative returns across most asset classes. And if you're using that as the single point or single point of information to make a decision, well, you might invest very conservatively the next year, i.e., this year, and asset classes have now had double-digit positive returns. So again, just making sure you're understanding the longer-term nature of the markets. You're seeking out more than just what's readily available. Again, that's where an advisor can play a key role, walking you through the history of the markets and what's happened in different situations and what would happen to a portfolio like yours in those various situations and showing you some of that history and even using software to run through scenarios for you. So those are a few that come to mind.

MARK: I'm glad you mentioned the availability heuristic because that kind of gets to this next issue of that you kind of touched on earlier a little bit, which is—how does that … every client should, you know, periodically evaluate the relationship and how's it going. So and take into things like the totality of the relationship over time, as well as all the different forms of advice you're getting. So how … what's your checklist for the client who wants to every so often kind of take a step back and evaluate the relationship? What are the handful of items they should be thinking about on that evaluation checklist?

BRYAN: OK, I'm going to sound a bit like a broken record, but you know, was there a plan put in place? Is the process being followed that they articulated earlier on? And then communication style, we touched on that earlier. Is there a gelling of the individuals and the communication style? Because this relationship will be so much based on the communication between the individuals. Again, that could be style. That could be frequency. That could be mode of communication. And again, this is where you should be pushing back and asking your advisor for your preferred style of communication.

The other item I would say—service. We see in many cases, it's not necessarily the developing a financial plan, the investment portfolio. It's often the service element of the relationship, which is moving money, getting checks, setting up accounts, titling accounts—all of the sort of daily stuff you need to have taken care of. If the firm or the advisor falls down on the servicing element, the best plan often won't be accomplished. So, there's a service side of the relationship I would definitely evaluate as I'm looking back and creating my checklist.

MARK: All right, last question, because, and we'll try to keep … covered a lot of ground here, which is useful, so people are probably going to have to go back and re-listen to this episode to get all the finer points, but if you want to leave them with like the three most important considerations when choosing an advisor, what would they be?

BRYAN: First off is firm. Is it a firm that you trust that brand and you trust what they do? They have a well-articulated philosophy, and they have a stable of experts. Nobody lasts forever. People move on. People retire. So, if you needed expertise in another area or a new advisor, would that firm have the resources to be able to provide that for you? So firm is one, you want a strong, stable, successful firm. Obviously, it's going to be around for a while.

The second one we've hit on a ton—communication style. This is such a personal relationship you are about to enter into. You need to make sure that communication style with you, and probably the multiple parties that will be involved in the relationship, is something you feel comfortable with.

And then lastly, again, we've covered it a couple of times—the process and philosophy of that firm. Does it resonate with you? Does it make sense? Is it well articulated? And do they go back to it frequently? So—firm, stock communication style, and then process philosophy.

MARK: Bryan Olson is president of Schwab Wealth Advisory. Bryan, thanks for being here.

BRYAN: My pleasure. Thanks, Mark.

MARK: The title of this episode is "Do You Need a Financial Advisor?" and of course, like many complex questions, the answer is "It depends." Like Bryan mentioned, it depends on what your goals are. It depends on how comfortable you are managing your own investments. And it depends on how comfortable you are trusting someone with the details of your financial life.

Maybe you could manage your investments yourself, but you just don't have the time or bandwidth.

Like changing wiper blades or adding windshield washer fluid, you probably have the ability to do it, yourself, but you can save time by having it done as part of a regular maintenance appointment.

It also doesn't have to be an "either/or" decision. Do some tasks yourself and leave the complex stuff to the professionals. The most important point is that if you do find yourself wanting to reach out and find an advisor, you want to be prepared. You want to feel confident in knowing what to look for—just as you would when evaluating a car mechanic or a contractor for your home. After all, it's your money.

As Bryan mentioned, start by identifying your goals. Do you want to leave a legacy for your family? Support a philanthropy? You have to be clear on what your goals are before you can work toward achieving those goals. Next you need to think a little about what kinds of investment services you need. Maybe you need help with managing a complex budget and generating a steady income for retirement. Maybe you need an estate plan or helping to prioritize multiple goals that matter to you.

The task will be easier if you and your advisor are on the same page as to what problems you need help solving.  Be sure to interview the advisor. Ask about their experience, their credentials, and how they are compensated. They expect to hear questions like these, so don't be afraid to ask.

A big point that Bryan made that I want to emphasize is asking about their philosophy or investing approach. How do they formulate their recommendations? How do they define success? Some advisors may specialize in certain types of investments, and you should ask lots of questions about those. This could be fixed income, or growth stocks, or tax-advantaged strategies, or something else.

Asking about an advisor's investment style is a good way to make sure that the advisor can explain his or her approach clearly. Lastly, you should ask about how the advisor makes decisions. This is a podcast about financial decisions. We focus on real decisions people face because that's when your beliefs are tested. Advisors have to make dozens of decisions per day. And those who have a disciplined approach to decision-making may be more likely to stay focused on your long-term goals.

You can learn more about the variety of investment advice options available at Schwab.com/advice.

That's it for this episode and also for this season for Financial Decoder. We will be back in late October with several new episodes. In the meantime, we've got about 70 past episodes posted, so check those out.

To hear more from me, you can follow me on my LinkedIn page or the social-media platform formerly known as Twitter. If you've enjoyed the show, please leave us a rating or review on Apple Podcasts.

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For important disclosures, see the show notes and Schwab.com/FinancialDecoder.

 

[1] This Day in History, "Duryea Motor Wagon wins first car race in U.S.," history.com, https://www.history.com/this-day-in-history/duryea-motor-wagon-wins-first-car-race-in-u-s

[2] History.com editors, Automobile History, history.com, originally published April 26, 2021, updated August 21, 2018, https://www.history.com/topics/inventions/automobiles

[3] Gold, Aaron, "When Did Cars Get Computerized?" autotrader.com, April 10, 2017, https://www.autotrader.com/car-news/when-did-cars-get-computerized-264028

[4] "How Computerized Cars Have Changed Auto Repair in Today's World," news release by Autotech IQ on newsdirect.com, December 19, 2022, https://newsdirect.com/news/how-computerized-cars-have-changed-auto-repair-in-todays-world-887152549