Reed Fraasa, a wealth advisor and founder at Highland Financial Advisors, discusses the evolving landscape of financial services where professionals are increasingly shifting towards independent advisory roles. He emphasizes the importance of understanding a firm's purpose, uniqueness, and process when seeking a financial advisor. Fraasa advocates for a fiduciary approach, personalized wealth management for accredited investors, and a collaborative team structure. He encourages prospective clients to utilize a list of questions provided by the Certified Financial Planner Board of Standards to ensure they find the right advisor to put their interests first.
Introduction
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Hello, thank you for coming to this YouTube channel. My name is Reed Fraasa, and I'm a founder and wealth advisor here at Highland Financial Advisors. Today, I want to talk to you about something that has been on my mind lately. We have a lot of prospective clients reaching out to us, and they're all looking for a certain type of relationship that they're not getting in their previous relationships with financial services professionals.
The Current Phenomenon in Financial Services
There is actually a phenomenon going on right now where many advisers or brokers are leaving the institutional world of financial services, like the Wall Street firms and the insurance companies, and they want to set up business as independents. We made that change back in 1998, and we've been a fiduciary-only independent advisor since that time. But I know it's really confusing for the consumer trying to find a firm that's providing this for them.
Seeking a Fiduciary Relationship
So, I wanted to talk to you today about what that relationship should look like and some things you should ask potential advisors you're interviewing. By the way, the Certified Financial Planner Board of Standards has provided a list of questions that you should ask. We have that link down below, right here as a PDF document you can download, which includes those questions and the answers we've provided.
Three Key Aspects of a Financial Firm
As you start this journey and begin to interview firms and individuals, I think there are three key things that you should understand about that firm or individual before you start working with them. Obviously, you want to understand what their fees are and what services they provide, but these three things are absolutely critical.
1) Purpose
The first thing is purpose: What is their purpose? Why do they exist as a firm? Why do they get up in the morning and come to work? What are they trying to achieve?
2) Uniqueness
The second thing is what makes them unique: How do they offer something unique from everybody else out there?
3) Process
The third thing is their process: If you're going to start a financial planning relationship with someone, it's more than just them picking investments. So, you want to understand how they do it? What is their process? Is it ad hoc, or is it a defined process that every client goes through?
Our Firm's Distinct Approach
These are very important questions. The first question to ask and understand is, "What is your purpose?" I'll tell you what our purpose is. It's very simple: We believe we can improve people's lives. We believe that everything we do matters and that the work we do improves people's lives. That's our filter for everything. If we don't feel that's happening, then we're not doing our job.
Now, how do we do this? We do this through very personalized wealth management for accredited investors. What's an accredited investor? That's a technical term. It's basically anybody who has a household income above $200,000 or a million dollars of investable net worth. That's really the people that we work with. But I will say this: if you don't meet that definition, we would still love to talk to you. We care about people getting with the right advisor. We know a lot of advisors and resources out there, so if you're not sure if you would be a good fit for us, call us anyway. We always offer a free 15-minute conversation with anybody, and if you're not a good fit, we want to make sure you get with an advisor who is going to be a fiduciary who's putting your interest ahead of their own.
What Makes Us Unique
The second thing you should ask a firm or an individual before you start working with them is, "What makes them unique?" There are probably dozens of firms or individuals around you that you could work with. When you sit down with someone, it's important, I think, to understand what they believe makes them unique and why that would be of interest to you. So, I can only tell you for us we have three unique things that we believe make us stand out. Now, some firms or individuals may do one or two of these, but I don't think very many do all three.
Real Fiduciary Firm
The first one is we are a real fiduciary firm. Now, what does that mean? Unfortunately, the industry is very murky about this. Some people will be a part-time fiduciary; in other words, when I'm talking to you about this account, I'm a fiduciary, and when I talk to you about this account or this product, I'm not a fiduciary. Very confusing. A real fiduciary is a fiduciary 24/7. We don't sell products, we don't make commissions, and we provide broad advice: retirement planning, tax planning, all these things. We don't limit our advice in any way, and in everything we do, we're a fiduciary. That means that we have to have a duty of loyalty and a duty of care.
Duty of loyalty simply means that we're always going to put your interest ahead of our own. Duty of care means that all of our advice is going to be in your best interest, and we believe that advice has to be monitored consistently to provide a fiduciary relationship. So, it's not a part-time thing. If you're not doing that, then you're not a fiduciary, and that's something you should really ask about. Make sure you understand it and get it in writing. Some people will talk, but they won't put it in writing.
Personalized Wealth Management
The second thing is that we offer very personalized wealth management. As I said, we don't limit the scope of our work. For example, we help clients who own businesses with their business planning. We've helped clients who were interested in putting solar panels on their roof, helping them make that financial and environmental or economic decision for them. There's really nothing that could happen in a client's life that we won't help them with and monitor that for the relationship.
So, that's really important: to make sure you understand what is unique about that firm. Do they have limited scope, or is it a broad scope? We call our process "the person as the plan" because it's really all about helping people make better decisions. You see, typically, what we have found from our over 30 years of experience is that people tend not to hit their goals not because of some external thing like the markets or something like that, but it's because they just haven't made the best decisions. So, that's what our personalized wealth management is all about helping people make better decisions.
Team Approach
The third thing that we think is unique about us is our team approach. Every client has a team that's working for them, and everybody has unique abilities on that team to make sure that they deliver a superior client experience. Every day we come in here, we want to make sure that we are delivering that to our clients. We believe a team structure is the best way to do that. It also frees up the lead advisor, the person that you're having a relationship with, to really spend quality time with you, to have those conversations, to make sure that you experience the best of our planning and investment services. And that means the clock is never ticking. We have to be able to provide all the time you need for that to make it a personalized experience.
Our Defined Process
The third thing that you want to understand and ask about for the adviser or firm that you're considering is, "What is their process?" So, they should be able to explain to you very coherently their process for managing your investments and their process for managing your financial planning. So, for us, we have a very defined process. It starts with something we call Discovery. What that is is us understanding your why: understanding what are you trying to achieve, why it is important to you, what are your feelings about money, about risk, about markets. It's deep conversations about what are your dreams and aspirations that you want to achieve. We don't want any of our clients to look back five, ten, fifteen years later and have regrets.
So, it's really important to go through this process of discovery with the client, where we become more aware of you, and many times, the clients become more aware of what's really important to them. We're also going to gather all your data. We obviously have to understand what resources you have for us to work with you to collaborate to achieve your goals. That's your investments, your liabilities, your assets, all those kinds of things, employee benefits, personal cash flow, all these things.
Collaboration and Implementation
And then we move into the next phase, which is Collaboration. So, once we've completed Discovery, now is the fun part because financial planning is not something we do for you; it's something we do together. Collaboration is where we put it all together. We start to prioritize your goals, we start to quantify, figure out what that lifestyle is going to cost, and we start to make decisions about prioritizing in your financial plan so that we can develop, hopefully, a feasible plan that we believe is reasonably achievable. And that is really key, that we start with that plan.
From that, we then move to Implementation. And Implementation is when we start to define the investment portfolio that's most likely to help you get to your goals with the least amount of risk. We also make many decisions, not only on investments but on employee benefits, cash flow decisions, on various products that you might need. Of course, we don't sell products, but it could be insurance or other things. So, all these decision points, you know, many times people get bogged down in that; they start to second guess themselves. We're going to be there to help make sure those decisions are the right decisions for you.
Monitoring: The Essential Last Step
And the last step is the most important: it's monitoring. I mentioned this before, but as a fiduciary adviser, we have to help you. The best way to help you is by monitoring all your decisions. As life changes happen, as things come up, we're there to help you through that process.
And I'll give you an example. Let's say you wanted to get in better health, and you said, "I'm going to run a marathon." So, you practice for three months, and then you run the marathon. Would you think you just completed your exercise for the next five years? No, of course not. That's ridiculous. It's not the way life works. That's not the way financial planning works. Monitoring is something that is extremely important, and we're flexible. We'll meet as often as a client wants to. As I said, the clock is never ticking. A client wants to meet monthly, quarterly, semi-annual, or annual, whatever the client wants, we'll be there for them.
Concluding Thoughts
So, these are the three questions that I would ask if I was going to interview somebody: What is your purpose? What makes you unique? And what is your process?
So, thank you for tuning in today. I really appreciate it. I hope this information helps you as you go out and interview firms looking to develop a relationship with a financial adviser or firm. Don't forget to subscribe to this YouTube channel if you'd like to get future videos. And download the CFP Board's questionnaire for questions that you should ask. Of course, we've answered those already. I really appreciate your time and have a great day.