Most Wealthy People Hire the First Financial Advisor They Meet. Here’s Why You Shouldn’t.

Love at first sight is something of a romantic cliche, not a money management strategy. Yet, if the behavior of the wealthy is anything to go by, blind commitment in finance is in vogue. 

A recent study has uncovered that most wealthy clients decide to work with the very first advisor they meet. But ask financial advisors if they think this is a smart move, and even they will tell you otherwise. 

The latest Dynasty Connect survey asked 1,000 high-net-worth respondents (all of whom have north of $500,000 in investable assets) about their relationship with their financial advisor. According to the survey, a total of 57% reported they had not met with any other financial management professionals before hiring their current advisor. 

“It’s an extraordinary finding that high-net worth families are selecting the first and only advisor they speak with. It’s like buying the very first house you look at,” said Dynasty Financial Partners CEO Shirl Penney.

You would think advisors would welcome the news. Yet most financial advisors interviewed for this article expressed trepidation about the trend. Their insights reveal why it may be wiser to play the financial advisor field before settling in for the long haul. 

Shop Around 

If you are serious about finding a financial advisor who’s a good fit for your particular needs, it pays to take things slow. To advisors, it shows you are serious and that you’ve done your homework.

“I don’t recommend people work with the first advisor they meet, even if that’s me,” says Danika Waddell, CFP President and Founder of Xena Financial Planning. “I always suggest they meet with at least three advisors before making a decision. I’d much rather work with a client who has explored their options and enthusiastically wants to work with me than engage with someone who just takes the first advisor out of convenience.” 

Similarly, clients should be aware of signing up to any advisory firm that seems overly keen to take you at first glance. 

“Most people spend more time planning who they will spend their weekend with than who they will trust their money to for the rest of their life,” says Freeman Linde, CFP and Lead Financial Planner at La Crosse Financial Planning. “The best firms have a process that encourages people to interview multiple firms, knowing they will still be chosen. If the first firm you talk to seems overly eager to get you to say yes, say no.” 

Matter of Trust

Regardless of how many people they’ve met with before, what makes someone settle on an advisor simply comes down to how comfortable they feel putting their money in anothers’ hands. 

“Clients are interested in an advisor they can trust,” says Jonathan Bird, CFP and wealth advisor at Farnam Financial. “Sometimes this is the first advisor they speak to – oftentimes it isn’t. Clients want more than just returns; they want high-quality stewardship of their whole financial life. Clients can tell when you genuinely care about their financial and personal well-being.” 

“I have not found that clients choose the first advisor they meet with – I have gained many clients where I was not the first advisor they met with,” says Angela Dorsey, Founder, Financial Planner Dorsey Wealth Management. 

“In my experience, I have found that clients choose the advisor they most connect with, the advisor who “gets them” and understands their problems,” she adds. “Clients choose and stay with advisors they connect with on an emotional level, and they can trust to solve their problems.”

Friend of a Friend

The survey also found a tendency to find advisors via the word-of-mouth grapevine, especially among older clients. Nearly half of the respondents (precisely 46%) landed their advisor this way, relying on referrals from friends, family, or colleagues. 

Those under 45 are pivoting to online channels and are three times as likely to find an advisor by way of search engines, social media, blogs, or other online digital domains. 

“Some prospects come visit with me after they have been referred by a friend… a sense of trust plays big,” says Amanda Howerton, Senior Advisor, Rather & Kittrell Capital Management. “When there is a referral by an existing client, I do feel that there is a foundation of trust, but I never want to take that for granted. Nor would I want to do anything to jeopardize that level of trust, as the prospects and clients are likely to talk about their shared experiences.”

Online Reviews

While a referral from a friend builds trust, many people turn to the internet to verify if other people feel the same way. Positive reviews about an advisor offer a glimpse into the experience of being their client and can instill confidence that you’re choosing the right advisor for your unique needs. 

Expect to find more financial advisor reviews online in the coming months, thanks to a recent change in regulations designed to help consumers make more informed and educated hiring decisions. Previously prohibited, the Securities and Exchange Commission (SEC) now permits advisors to ask their clients to display their reviews on certain websites that include required regulatory disclosures.

“The SEC deserves credit for its recent decision to let financial advisors ask their clients to write online reviews,” says Brian Thorp, Chief Executive Officer of Wealthtender, an online directory with financial advisor reviews. “We’ve learned that many people are happy to write reviews about their advisors to help others decide if they’re a good fit to work together, too.”

Niche Down

Many advisors cater to a certain clientele, often with whom they share key backgrounds, lifestyles, or values. There are, for instance, advisors for religious groups, specific professions or single parents, or other family units. It could pay to lean into your tribe.

“Vet advisors’ websites to see what type of clients they generally work with,” says Christopher Johns, Founder & Wealth Advisor at Spark Wealth Advisors. “Strong candidates will already have clients that are similar to you, either in age, career, family dynamic, or other demographics. If you fit an advisor’s “niche”, then there’s a good chance they will be a good fit.” 

The world of financial management is evolving rapidly with new technology and inter-generational change leading to an explosion of online financial content and influencers spurring surging interest in financial topics. The profession is set for break-neck growth over the coming years, with the U.S. Bureau of Labor Statistics predicting employment of financial advisors to increase by 15% between 2021 to 2031 – triple the rate of the average growth rate for all occupations. 

In an increasingly crowded market, how new clients and advisors match up could become even more important – determining the quality of the advice they receive and, ultimately, their financial outcomes. 

Delving below the surface and thoroughly exploring the landscape of available advisors could pay big dividends in the long run. By investing the time and effort to find the right financial advisor whose expertise aligns with individual goals and circumstances, individuals can find the right partner to help them trailblaze their own unique path to financial success.

Find a Financial Advisor

Do you have questions about your financial future? Find a financial advisor who can help you enjoy life with less money stress by visiting Wealthtender’s free advisor directory.

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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.