“5 things to look for when hiring a financial planner or adviser”, with Steve Sivak and Tyler Gallagher
Anyone can benefit from working with an advisor, even people with a negative net worth. The perception is that we just take your millions and manage it for you, and while there are advisors that do just that, good ones will provide much more value than just trading your investments. We help people with cash flow, estate planning, insurance needs, tax planning, student loans, real estate, educational funding… There is so much more to it that can benefit anyone.
As part of our series about what one should look for when hiring a financial planner or adviser, I had the pleasure of interviewing Steve Sivak. Steven Sivak has spent 16 years in the financial services business, working with clients through several market cycles and multiple Wall Street firms. Client frustrations with the ‘Big Bank’ model led him to create Innovate Wealth, a financial advisory and investment management practice that refocuses the business away from a product sales culture and back to the clients. Innovate Wealth focuses on education, investor behaviors, and affordable, evidence-based investing.
Thank you so much for doing this with us! Our readers would love to ‘get to know you’ a bit more. Can you tell us a story about what brought you to this specific career path?
It was a stroke of serendipity…I have an engineering degree, and early in my career as an engineer and financial consultant, I just felt disconnected from end users. Who was I really helping? It felt like a bunch of paperwork, spreadsheets…but at the end of the day it felt hollow.
I had planned to return to school for an MBA and try to find a way to do more meaningful work, and I ran into a friend of mine at the gym. He was already in the business at UBS and he talked me into a lunch, which led to an interview, which led to me accepting an Advisor role with them.
Can you share a story about the most humorous mistake you made when you were first starting in the industry? Can you tell us what lesson or takeaway you learned from that?
Ha, so many! I became licensed in January 2007, which we all know now was almost perfectly the beginning of the financial crisis. Every investment I made for people in 2007 proved to be a mistake! Now some of that can’t be helped, but some of it was just my naivety. Wall Street does not train you on finance, Wall Street trains you to sell.
Are you working on any exciting new projects now? How do you think that will help people?
I am building a financial literacy course, something that I hope will help young people to learn the basics of personal finance, and more importantly avoid big mistakes! I hope to take the course to schools, veterans groups, etc.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Is there a takeaway or lesson that others can learn from that?
I started building my career during the worst market environment since the Depression, those were some dark days. I’d say throughout my first 3 years in the business it seemed touch and go, I never knew if I was going to survive. I’d say the tipping point came when I stopped following sales scripts and just started being real. My niche developed because I was willing to shoot people straight, there are always people that want to hear the truth.
What three pieces of advice would you give to your colleagues in the finance field to thrive and avoid burnout? Can you give a story or example?
- Life is too short to worry about an extra zero in your account. So much of the finance industry revolves around wanting more: more revenue, more stuff, more money, etc. It can all go away tomorrow, it’s better to find balance before it’s too late.
2. Be very straightforward. The Wall Street firms have layers of fees, some the clients know about, some they don’t, and it’s purposefully opaque. I think people appreciate when you make things very simple, honest, clear.
3. Someone told me when I was starting my business — ‘go and be of service, the success will come.’ I’ve never forgotten that. People need your help, go serve them honestly and well, and the sky’s the limit.
Ok. Thank you for all of that. Let’s now move to the core focus of our interview. As an “finance insider”, you know much more about the finance industry than most consumers. If your loved one wanted to hire a financial advisor (not you :-)), which 5 things would you advise them to find out about before committing? Can you give an example or story for each?
1. Find a Fiduciary — this is probably the most important. You wouldn’t hire a doctor that wasn’t sworn to ‘do no harm’ — yet most of the financial industry operates under a much weaker ‘suitability’ rule. That’s not in your best interest. The best comparison I’ve heard is a suit salesperson; A typical advisor will sell you a suit the fits, a fiduciary advisor will sell you one that fits and looks good on you!
2. Clear fees — it’s not really about what kind of fee, at this point advisors charge clients in many different ways. Building off #1 above, you want someone that does not get commissions on what they sell you (let’s be honest and call them kickbacks). That is inherently a conflict, and dangerous, as advisors know very well they can make more by selling you one thing vs another. Ask for a clear fee schedule, and ask for all the ways they can make money — if they stutter at all or aren’t clear, don’t hire them. I have asked prospects in the past to ask their advisor how much they’re paying, and the advisor responds ‘I’ll get back to you on that.’ If they have to think about the response, or worse, they’re not even sure what it is?!! Fire them.
3. Clear products and cheap product fees — ask them why they invest in the things they do, and can it be done cheaper. If they can’t answer with sound reasoning, or the product fees are too high, don’t hire them. Most client statements I see from someone else have no clear strategy, a mishmash of products, and usually they’re way too expensive.
4. An investment process — anyone can buy a bunch of stuff and let it sit in an account and never talk to you again, you don’t need an advisor for that. They should have a clear investment process that’s backed up by evidence and rules. They should be able to articulate the process in ways you understand, so you’re clear on how it’ll help you achieve your goals, and when and why you will buy and sell things.
5. Last but not least, and this one should be obvious, but check their background! Sites like https://brokercheck.finra.org/ give detailed descriptions of previous claims or complaints against the advisor. Ask them about it! Usually where there’s smoke, there’s fire. A lot of bad situations can be avoided if more people knew this was part of public record.
I think most people think that financial advisors are for very wealthy people. This is likely not actually true. Can you explain who would most benefit from hiring a financial advisor and why? Can you give an example?
This is just more Wall Street BS. Anyone can benefit from working with an advisor, even people with a negative net worth. The perception is that we just take your millions and manage it for you, and while there are advisors that do just that, good ones will provide much more value than just trading your investments. We help people with cash flow, estate planning, insurance needs, tax planning, student loans, real estate, educational funding… There is so much more to it that can benefit anyone.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Definitely the friend I mentioned above, who eventually became my business partner. He was instrumental in helping me develop my career. During 2008–09, almost every day I wondered if I’d made a huge mistake, and was starting to look for another job. He kept me focused and on the path, and ten years later I’m so glad I stuck to it.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I’ve already given it away, but I’m passionate about financial literacy and education. It’s not about trying to pick stocks, it’s building the base of the pyramid right, and not making big mistakes early, that allows you to be wealthy later. If we could figure out a way to expose fact from fiction in our industry, so that people could make financial decisions with clear eyes, it would save so many people.
How can our readers follow you on social media?
I’m @innov8wealth on Twitter.
Thank you so much for joining us. This was very inspirational.