How To Choose A Financial Advisor In Washington DC - 9 Steps | Jurnex (2024)

Nine tips for affluent and high net worth investors

How To Choose A Financial Advisor In Washington DC - 9 Steps | Jurnex (1)Written by Tom Yeung, CFA | CDFA
Investment Advisor & Fund Manager, Jurnex Financial Advisors

Everyone knows the importance of managing wealth. But with 292 registered advisory firms in the District of Columbia, it can feel overwhelming to choose the right one. Where to even begin? So in this article, we’ll cover the nine essential tips on how to choose a financial advisor in Washington DC.

Washington DC: Why choose a financial advisor?

Given the relative wealth of Washington DC, even affluent and wealthy families can often feel like they’re just treading water. But that’s why finding the right financial advisor is essential. Because managing your money CORRECTLY can help grant you the most sought-after goal in human history: freedom.
Imagine that. Freedom from worrying about the next paycheck. Freedom to do what makes you happy and fulfilled.

And with proper savings and financial management today, ANYONE can become financially independent in their lifetimes — even those living in a higher-cost city like Washington DC. We’re members of one of the wealthiest countries in the world. How is it NOT possible to succeed?

How To Choose A Financial Advisor In Washington DC - 9 Steps | Jurnex (2)

Like in navigation, small course corrections today can mean major differences in the future.

Small changes today mean significant differences in the future.

All this is possible because of the power of compound interest. $1 saved in your twenties turns into $7 by retirement in today’s dollars. And even if you’re not that young, every dollar saved in your 50s still doubles in value by the time you reach 65.

Currently, the average household in the Washington DC metro area earns $99,700 per year. If the average family manages to save 15% of that income, how long would it take you to have $1 million?

The answer? Just 23 years.

And what if you saved 20% of your income? Then you would have $1 million in just under 20 years. THAT’S why it’s so important to find a financial advisor in Washington DC.

A financial advisor in Washington DC can help you with local knowledge

A locally-based financial advisor has one key advantage over Robo advisors and DIY: they understand the market

    • Real estate. A good financial advisor in Washington DC will understand the local market, and whether you’re buying a good investment.
    • Taxes. People working in Washington DC can often choose to live in neighboring Virginia or Maryland, affecting their tax rates.
    • Lifestyle. Many DC residents work in government or in a related industry that has different economics.

How To Choose A Financial Advisor In Washington DC - 9 Steps | Jurnex (3)

The vibrancy of Washington DC, reflected through its diverse neighborhoods.

Nine Tips On Choosing A Financial Advisor in Washington DC

Now that we’ve covered the importance of choosing a financial advisor in Washington DC, let’s see the nine tips that will help you select the right one.

1. Do your research

What do financial advisory and car buying have in common? When it comes to buying cars, almost 40% of shoppers purchase a vehicle within 4 hours of visiting their first dealership. And with financial advisory, people are often equally quick to pull the trigger.

While this may work for some cases, it’s generally better to do your research on your financial advisor before committing your life savings. Learn more about investing 101.

    • Check the financial advisor’s CRD license. FINRA (The Financial Industry Regulatory Authority) is the US authority that licenses all broker-dealers and investment advisors in the country. Every brokerage and financial advisor must pass specific compliance rules and regulations to maintain their security licenses.
    • Run the advisor through Broker Check.FINRA also collects information about advisors to issue censures or suspensions as needed. You can check your advisor’s record FINRA’s Broker Check website.
    • Referrals and testimonials.Often, the advisor’s clients are the best source for unbiased advice. You’re looking for someone who’s not only skillful but understands how to interact with his or her clients well.

2. Do they have the right background?

Finding a financial advisor in Washington DC often means looking for the right fit. If you work in the military, a VA specialist might help you get more out of your benefits. Or, if you work as a government contractor, the right financial advisor will know the ins and outs of government-sponsored healthcare plans.

    • Experience. When it comes to financial advisory, experience matters. That’s because DC residents are surprisingly diverse. Financial advisors generally specialize in 2-3 particular areas, and it’s up to you to find the advisor with your experience.
    • Designations. Does the advisor maintain the right financial designations? The most common classification is CFP (Certified Financial Planner). Still, higher-level designations such as CFA (Chartered Financial Analyst) and CPA (Chartered Public Accountant) can signify more significant experience in investing or taxes.
    • Work history. Has the advisor had the time to develop his or her skills? High-grade work history can help reflect an advisor’s set of skills.

3. Is your advisor a fiduciary to YOU?

A fiduciary is someone who’s ethically bound to serve in the client’s best interest.

Fiduciary duties include

    • Care
    • Loyalty
    • Good Faith

But in the US, not every advisor has to be a fiduciary. That’s because the rules only apply to retirement savings. Additionally, insurance salespeople don’t have to be fiduciaries to their clients. Instead, they have a primary duty to serve their EMPLOYER. These days, the patchwork of fiduciary laws can seem overwhelming.

But in the end, when it comes time to choose a financial advisor in Washington DC, the first question you should ask them is: “are you a fiduciary to ME?”

4. Do you get along with the advisor?

Albert Mehrabian, a pioneering researcher of body language, found that the total impact of a message is about 7 percent verbal (words only), 38 percent vocal (including tone of voice, inflection, and other sounds), and 55 percent nonverbal.

That means it’s essential that you pay attention to nonverbal cues by your advisor.

    • First impression. When you first sit down with your advisor, do you feel comfortable in their presence?
    • Focus of attention. Does the advisor pay attention to you and your situation?
    • Sense of comfort. Is he or she someone who can make you feel comfortable? Do they treat you with warmth and respect?
Why fit matters

Your financial advisor is someone who you will have to trust. That’s because you’ll be sharing private aspects of your life. And the more open you can be about your finances, the better your outcomes will get.

A study by Wells Fargo found that Americans find money the #1 hardest thing to talk about (44%)

Money comes ahead of death (38%), politics (35%), and religion (32%). So when it comes to finding the right financial advisor, fit matters.

5. Avoid the bait-and-switch

Many financial advisory firms use salespeople rather than advisors to sell services. Larger firms are particularly guilty of this practice.

That’s because many of the best financial advisors often don’t have the time to advise their actual clients. Instead, they hand off the responsibility to a more junior associateto do the work.

While this is fine for day-to-day advisory, you want to make sure you’re paying for what you get.

Beware of the insurance bait-and-switch

In the industry, many financial advisors are actually insurance salespeople. That’s because insurance licenses also allow people to sell other securities.

As long as they’re open about this, that’s fine. But watch out for insurance salespeople who masquerade as financial advisors, only to try selling you insurance but at the end of the day.

6. Go with a fee-only advisor

Have you ever wondered how financial advisors get paid? It turns out that incentive structures matter.

    • Fee-only. Fee-only Advisors work on a fee-for-service model, so you only pay for the advice you use. Typically, fee-only advisers will charge either by the hour or percentage of assets under management. In either case, the fees are upfront and easy to understand. Fee-only is the best payment structure for the client.
    • Commission-based. These types of advisors generate revenue via commissions. That means they only get paid when you trade or buy a product, and so they’re incentivized to have you over-trade to make extra commissions.

Overtraining is terrible for your long-term wealth. Not only are you spending more money on trading fees, but you’re also triggering capital gains taxes every time you transact.

Fee-only advisors, on the other hand, won’t have you over-trade. They’re compensated for the time they spend with you, or by helping your portfolio grow. Learn how to find free financial advice

7. Test their knowledge

Here’s a trick I like to use when analyzing the quality of other advisors: ask them a difficult question and see if they can answer it correctly.

It takes some homework on your part to come up with a sufficiently tricky question. But you must. Smooth-talking advisors might bluff their way through the answer. But if you already know what to look for, there’s no fooling you. For example, you might ask an advisor about the differences between SEP and SIMPLE IRAs. Or you might ask about maximizing FERS payouts. Just choose a topic that’s relevant to your situation.

8. Interview more than one financial advisor

There’s a strong temptation to go with the first adviser you find. Sometimes, this tactic works. You might get lucky with your first choice. However, interviewing only one adviser is often a recipe for disappointment.

Interview three advisors before choosing

I typically tell people to interview at least THREE financial advisors before settling on one. Why three?

    • First interview. You might like the advisor, but you don’t have any context to compare
    • Second interview. You start to get a sense of which advisor is better than the other
    • Third interview. Now, the best advisor stands out far better. And if you still aren’t satisfied, feel free to interview a fourth or however many you need.
Why put in the effort to interview?

There are few things more critical to managing your nest egg. And your financial advisor will play a key role in advising you on investments.

So don’t be lazy. Make sure you could do your homework when choosing a financial advisor in Washington DC.

9. Know what you want

Finally, when you choose an advisor in Washington DC, it’s essential to know WHAT you want. Washington DC skews heavily towards the federal government, and so many advisors specialize in advising federal employees.

What advisor are you looking for?

When you’re looking for a financial advisor, you should have a clear sense of what you want to get out of it.

    • Young professional. Are you looking to save more money? Buy your first house? Have a child?
    • Business owner. Do you need help balancing between business and personal investments?
    • Military. Are you a Veteran looking to understand the complicated VA system?
    • Government employee/contractor. Given a relatively stable job, are you looking to have your savings do more for your bottom line?

Where to find more resources

If this seems like a lot of information, don’t worry. The great news is that help is available. That’s because here at Jurnex, we work with individuals and families just like you to make the most out of investing. I’ve helped invest client money for over a decade in the same old-fashioned way. And that’s to seek out great companies in great industries that can you can buy at a discount to their fair value. Sounds too simple to be true? Give me a call today, and I’ll show you that it’s still possible after all these years.

About Jurnex

We are an independent registered investment advisor and asset manager. We have the securities backing of Charles Schwab, yet we retain our operational independence from any third party. This means you can have the confidence your money is safe with one of America’s best brokerages and still receive knowledge and advice from an independent firm focused on YOU.

Want to learn more?

Book an Initial Meeting

As an experienced financial advisor and investment enthusiast, I bring a wealth of knowledge to the table when it comes to managing wealth and making informed financial decisions. With a background in investment advising and fund management, I understand the intricate details of the financial landscape and the importance of choosing the right financial advisor.

Now, let's delve into the concepts covered in the article "Nine tips for affluent and high net worth investors" by Tom Yeung, CFA, CDFA Investment Advisor & Fund Manager, Jurnex Financial Advisors.

  1. Importance of Choosing a Financial Advisor in Washington DC:

    • The article emphasizes the significance of selecting the right financial advisor in Washington DC, considering the wealth concentration in the region.
    • It highlights the role of a financial advisor in helping individuals achieve financial independence, especially in a high-cost city like Washington DC.
  2. Local Knowledge of a Financial Advisor in Washington DC:

    • The article underscores the advantages of a locally-based financial advisor who understands the specificities of the Washington DC market.
    • It mentions the importance of expertise in areas such as real estate, taxes (influenced by neighboring states), and understanding the unique lifestyle and economics of DC residents.
  3. Nine Tips on Choosing a Financial Advisor in Washington DC:

    • The article provides nine tips for selecting the right financial advisor, starting with the importance of research.
    • It advises checking the financial advisor's CRD license, running them through FINRA's Broker Check, and seeking referrals and testimonials from clients.
  4. Background and Specialization:

    • The article emphasizes the need to find a financial advisor with the right background and experience, especially tailored to the individual's specific situation.
    • It discusses the importance of the advisor's experience, relevant designations (CFP, CFA, CPA), and a strong work history.
  5. Fiduciary Responsibility:

    • The article explains the concept of a fiduciary and the ethical duty to serve in the client's best interest.
    • It notes that not every advisor is obligated to be a fiduciary, especially in areas beyond retirement savings.
  6. Personal Compatibility with the Advisor:

    • The article highlights the importance of getting along with the advisor on a personal level.
    • It suggests paying attention to nonverbal cues during the first meeting and emphasizes the significance of a good fit due to the private nature of financial discussions.
  7. Avoiding Bait-and-Switch:

    • The article warns against financial advisory firms using salespeople instead of advisors, particularly in larger firms.
    • It advises being cautious of insurance bait-and-switch tactics, where advisors may primarily be insurance salespeople.
  8. Choosing a Fee-Only Advisor:

    • The article discusses the payment structures of financial advisors, favoring the fee-only model where advisors are compensated for their time rather than through commissions.
  9. Testing Advisor's Knowledge and Interviewing Multiple Advisors:

    • The article suggests testing an advisor's knowledge by asking difficult questions relevant to the individual's situation.
    • It encourages interviewing multiple advisors (at least three) to make an informed choice based on comparisons.
  10. Knowing What You Want:

    • The article concludes by emphasizing the importance of having a clear understanding of what one wants from a financial advisor.
    • It provides examples of specific needs based on the individual's profile, such as being a young professional, business owner, military veteran, or government employee/contractor.

In summary, the article by Tom Yeung provides comprehensive insights into the considerations and tips for affluent and high net worth investors in Washington DC when choosing a financial advisor. These tips cover aspects ranging from research and background checks to personal compatibility, payment structures, and knowing one's specific financial needs.

How To Choose A Financial Advisor In Washington DC - 9 Steps | Jurnex (2024)


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