The Know Your Advisor Tool, or KYA for short, is in development… and I’m looking for your help. The tool is designed for investors to help them figure out who the good financial advisors are out there. It’s not designed to give a pass/fail rating to an advisor, but rather is to be used on a comparison basis. For example – you put three advisors through the KYA (one could even be your existing advisor) and you come out with three different scores: 60%, 70% and 80%. Is the advisor who scored 80% the winner? Maybe not. The tool is only there to assist you in making your decision, which is hopefully based on more than just a score on this KYA.

I Need Your Input

Before this tool is “released” into the wild, or at least before people start using this version, I’d like to ask all of you for your input. If you are an investor, financial advisor, or other interested party, I’m looking to make this tool as good as possible the first time out. (Chances are I will update it annually, but nonetheless it would be nice to have it critiqued before people start using it en masse.)

I had originally asked my blog readers for their input, coupled that with my own, and this is what I’ve come up with. This is very much a tool already designed by investor and financial advisor input (see the original call to action here), but I’m still open to suggestions for improvement. Sky’s the limit – so please do leave your comments in the comment section down below and I’ll look into it. After another week or so, I’ll unveil “Version 1.0″.

KYA – Know Your Advisor

So here it is (so far). There are three sections. First we start to if the advisor is actually an advisor, then we see how well they stack up against other advisors, and if you find that you like you then establish a service agreement with them.

Part I: Red Flag Check

This is pretty easy and shouldn’t take more than a few minutes. Part I simply involves making sure your advisor is actually an advisor and then checking to see if they have had any disciplinary actions against them in the past. All the hyperlinks and phone numbers are included for quick and easy reference.

CLICK HERE TO COMPLETE THE RED FLAG CHECK

Part II: Advisor Scorecard

This part of the KYA will assign a rating out of 100 for the advisor in question. I’ve  designed the questions and tried to make them so that there is little subjectivity in the possible answers. The reason is, if you really knew what questions to ask, you probably don’t need an advisor. But, most people DO need an advisor. So the whole purpose of this scorecard is to help them figure out how their advisor stacks up in the grand scheme of things.

You’ve got a few options:

1. PRINTABLE QUESTIONNAIRE (Modified after initial feedback, still in BETA mode and not to be used yet.)
2. ONLINE QUIZ (Modified after initial feedback, still in BETA mode and not to be used yet.)

The questions are all the same – the benefit of the printable questionnaire is that it has the scoring key on the sheet so you can see how I chose my criteria. Some questions have multiple correct answers with partial marks available and some are just “right or wrong”. The benefit of the online quiz is that you could administer it over the phone to save yourself some travel and time – plus it calculates your score for you. For the questions which ask for samples of work (which you obviously won’t be able to see over the phone) you can just make sure to go in and see it in person if they’ve scored high enough to warrant a visit.

Part III: Service Agreement

This section is not yet complete, but let me provide the synopsis. This will be a form that your advisor signs that will confirm in writing what your servicing arrangement is, your fee structure, advisor contact information (his/her name, assistant, emergency contact, branch manager, etc.) and will also include an agreed to protocol if either of you feel the relationship isn’t working out. Remember, this is business – but a lot of people are afraid of confrontation. If expectations are spelled out ahead of time, you’ll be better off. I hope to have this done in the next two weeks.

Comments, Critiques, and Questions WELCOME

Yep – this tool is for the investor. I imagine some in the industry might not like it (either now or when it’s done) because you might find out that *some* advisors are not all that they are cracked up to be. There will be some advisors who will like it, too. But this is supposed to be a tool for the investor and the investor only. I welcome all input from all parties: investors, advisors, regulators, and other industry participants. Let’s keep the negative feedback civil though, shall we? :)

Watch this space…

Preet Banerjee, B.Sc., FMA, DMS, FCSI