The Art of Asking the Right Questions

Don’t Just Look for the Answers You Want to Hear

In your career, I’m sure you’ve spoken with sales professionals or recruiters and listened to their pitch. Sometimes, although what they’re offering sounds great, you might suspect that it’s too good to be true and get a familiar, funny feeling in your gut. Even though we’ve all felt this way, we usually choose to say nothing, nod our head, and convince ourselves that the positive aspects of the conversation are the truth.

This behavior becomes a habit and impacts our decision making whether we’re buying a car or deciding which wealth management firm is appropriate. The problem isn’t that we’re poor listeners, we just prefer to reach a clear answer and block out information that will get in the way of a solution. In this process, we tend to miss key details, listen to what we like to hear (especially if its praise about ourselves), and build an internal monologue that validates our decision. Even smart, seasoned financial professionals hear a sales pitch, like what is said, and choose not to dig any deeper.

It’s always important to challenge the premise of any information provided to understand its real meaning. For example, if you take the statement, “we have zero platform fees on our advisory platform,” at face value, you would assume that there are no platform fees. A good reply might be, “What fees or expenses do your platform, technology, and product suite have that may lower my clients’ return?”

This applies when discussing your projected payout too. Firms may quote you a higher number, but charge fees elsewhere to offset the amount they are offering. Hidden fees may include:

• Technology

• Licensing

• Admin support

• Platform

• “Clean shares” (mutual funds with high markup)

• Mark-up on custodial fees, E/O insurance, or bonds

• Cash sweep

• Portfolio accounting system

• Performance reporting

• Revenue sharing on mutual funds

• Side by side fees participation

We have even seen nearly 100% to 100% payouts offered, and firms are still claiming that there are no fees! If this is the case, where are they making their margins? Ask, “If my payout is 100%, and I earn $1,000, will I net $1,000?”

You will find that in order to get the right answers, you will need to ask the right questions. Go through the firm’s ADV with their sales representative and look for conflicts of interest. Make them show examples in their wrap fees, trading, etc., and what the costs to clients may be.

I cannot stress it enough; separate the sales pitch from the facts and you will get the information you need to make an informed decision. You are an intelligent professional, make sure you ask intelligent questions.

Rich DeSalvo

CEO and Founder

f3Logic, LLC

Where Fiduciary Freedom is First

Download our ebook – 90 Questions for a Better Decision

Advisory services are offered through f3Logic, LLC, a registered investment advisor.