Treat The Whole Patient
Doctors know that they need to treat the “whole” patient. Often treating just the physical symptoms isn’t enough. You may also have to address lifestyle, habits and psychological problems that can cause physical ones.
A good financial advisor also “treats” the whole “patient,” educating his clients about behavioral errors that investors are prone to make simply because they are human beings. My book, “Investment Mistakes Even Smart People Make and How to Avoid Them,” addresses 77 such mistakes. Good advisors educate their clients on the science of investing, but also the science of investor behavior. Forewarned is forearmed.
Eat Their Own Cooking
I always find it comforting when a doctor tells me that she is following the same regimen that she’s prescribing for me. Similarly, financial advisors should eat their own cooking. They should be investing in exactly the same investment vehicles they’re recommending to you.
The advisor should be willing to show you his own statement from the custodian holding his assets so that you can verify his claim. For privacy reasons, an advisor might want to redact the dollar amounts, but he should be willing to show you his personal investments.
He should also be able to show you that his company’s 401(k) or other retirement plans offer the same vehicles he is suggesting to you. That doesn’t mean that his asset allocations will be the same as he recommends to you—because each person has a unique ability, willingness and need to take risk—but the vehicles offered should be identical. If they aren’t, don’t hire him.
Have A Good Bedside Manner
In 1892, The Journal of the American Medical Association published an article about the importance of health-care professionals having a good bedside manner. The article stated: “The true basis of the good bedside manner is a large heart. Some expansiveness of the intellect is undoubtedly an advantage but a humane and sympathizing nature outweighs all other qualities.”
Many hospitals now recognize the importance of bedside manner, and have made it a standard practice to include a health care professional’s soft skills—such as respect, courtesy, listening and ability to anticipate a patient’s needs—as key performance appraisal components.
A good bedside manner can be equally important when providing financial advice that might be hard for an investor to hear. For example, delivering the message that you’re far behind on your financial plan is not unlike delivering the message that your weight will lead to diabetes. You want to work with a financial advisor who, while being able to deliver a tough message when it’s needed, will do it with respect and empathy.