27 Mar

The Illusion of Experience

March 27, 2014

I read an interesting article this week about a financial advisor in New Jersey that put forth the idea that the age of an advisor and experience level of an advisor are not always synonymous. Being part of the “Millennial” generation, I have to admit I have a bias where this is concerned, but there is definitely some truth in the words he wrote.

Mr. Zagarola contends that individuals seeking a long-term relationship with a financial advisor should not solely base their decision of hiring that advisor on the number of gray hairs but should consider other factors in the process. For example, he suggests that younger advisors may have an advantage over their seasoned counterparts due to the following reasons:

  1. Younger advisors are more likely to keep up with new financial planning strategies, tools, or software.
  2. Younger advisors have something older advisors do not – YOUTH, which means that a younger advisor is more likely to be around for the retiree throughout a retirement period and sometimes even for the passing of wealth to the next generation.
  3. Younger advisors are more likely to be able to effectively communicate with that next generation (i.e. the kids and grandkids of retired individuals).

Mr. Zagarola also suggests that some retirees have a jaded view of experience level because younger advisors could not possibly understand the markets and the real world due to the length of their working careers. Speaking for other younger advisors in the industry, I can tell you that I am quite realistic about the future of the financial markets and economy in general. Mr. Zagarola says it best in his article:

“Most advisors, regardless of age, have now experienced the worst downturn since the Great Depression as well as a bull market, providing real-world experience in how to manage the ups and downs. For boomers, this should provide reassurance that their advisor has the requisite level of experience while being young enough to offer continuity through the years.”

Yes, I am biased, because I think youth is an advantage, but I am also not naïve enough to think that it should be the sole reason why someone hires an advisor. The opposite is also true. Do not select your advisor just because they are the same age as you or because they seem to have enough “experience.” Instead focus on factors that make a long-term relationship last, like chemistry, communication style, ability to trust, someone that is truly looking out for you and your best interests. Don’t be afraid to test their level of competence before you hire them either. You might be surprised with the results! 

Remember, experience can be an illusion, and your selection of a financial advisor is not a five-year decision but rather a lifetime decision.

Source: http://www.fa-mag.com/news/why-age-shouldn-t-matter-when-choosing-a-financial-advisor-17251.html

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