One pair of clients , a couple his age who had many millions of dollars in net worth , put it another way : “ You know everything about our net worth , but we don ’ t know anything about yours .” He says his net worth was similar to theirs . But he wondered how they would have felt if he had only $ 500,000 in his 401 ( k ) s and was not totally funding them .
“ What type of trust would that build with somebody ?” Kahler asks . He says being able to respond in a relatable way to a client “ can bring confidence that
“ There should be some correlation between the success of an advisor and the success of clients , and that doesn ’ t necessarily mean that my net worth and a client ’ s net worth match each other .”
— Lori Van Dusen
the planner is a doer and that they have applied the advice that they are giving to the clients .”
But even if advisors are transparent about their finances , and the finances are healthy , their net worth won ’ t necessarily be germane to the clients ’ financial lives , says Lori Van Dusen . “ There should be some correlation between the success of an advisor and the success of clients , and that doesn ’ t necessarily mean that my net worth and a client ’ s net worth match each other . It just means that my investments philosophy and my discipline and how that translates into my own personal success should be somewhat transferable to clients ,” says
Van Dusen , the founder and CEO of LVW Advisors in Rochester , N . Y .
Karger agrees . Clients should focus on someone who understands and subscribes to their values and goals , not the net worth of the advisor , he says . For instance , it ’ s good to have youth on the advisory team , people who can grow with the assets . Would it matter if the young advisors on the team were offering good advice but hadn ’ t built their own wealth yet ? Karger notes that he and his brother , Wesley , were
young when they started out . “ But we were ambitious and smart , and that was enough for many of our initial clients ,” whom he describes as founders and hard-working entrepreneurs .
“ People want to work with people like themselves ,” Karger says . “ Our success is also something that is also really important to our clients , as they know that the only way we have achieved success is by making our clients successful .”
Even if most clients don ’ t openly inquire about their advisors ’ financial health , it does not mean that they are unaware , Van Dusen notes . “ It ’ s an interesting and important question and I think people get at it in different ways , just not that blunt .”
Advisors , she believes , should provide client references . “ The clients should be able to speak to the advisor ’ s success in advising them and in reaching their goals .” She adds that clients can also get information from public data .
Barse says he always tells clients that it is important to conduct the appropriate due diligence before they hire a financial advisor . “ And that ’ s not asking your best friend or most trusted friend from church who they use as an advisor because they might lack the appropriate expertise to understand whether or not the financial advisor is truly doing what is in their best interest ,” he says . Part of that means going to the Financial Industry Regulatory Authority ’ s BrokerCheck site “ to make sure that you have the insight into whether or not this person has any cause for pause or reasons to be concerned ,” he adds .
One question Kahler suggests clients ask their advisors is , have you ever made financial mistakes and what have you learned from them ? He says he rarely gets asked that question , but he told one client that his job is to make every financial mistake possible so that he can help the client not to make them .
“ And yes , I have made financial mistakes ,” Kahler says . Though he has never filed for bankruptcy , he says he was once staring it in the face . Speaking openly about those mistakes , whether they are about business or real estate or something else , helps to build trust , he says . “ Most clients come to us thinking that we are flawless and that we are experts in their lives , and we are not . So I think it ’ s important that we can reiterate mistakes we made and what we ’ ve learned from them .”
Even someone who has filed for bankruptcy is not necessarily a bad advisor , he says . “ It could actually mean that they are very good if they have learned a ton from those experiences . That ’ s a great resource for them to say , ‘ Yeah , I have been on that side . I have faced what you have faced .’”
Karger adds , “ As long as the advisor turned a negative event into a
30 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2023 WWW . FA-MAG . COM