What this financial industry veteran looks for in an adviser

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After 43 years in the brokerage business, Colin Monteith went looking for an adviser of his own. He found one after a few months, but what an epic search it was. The onetime adviser and manager of advisers saw 10 different people and conducted 13 interviews.

To help you in your search for an adviser, I asked the now-retired Mr. Monteith to do a Q&A about his experience. Here's an edited transcript of our conversation:

In total, how long did it take you to find an adviser?

I probably spent close to 40 or 50 hours in total over close to two months. I didn't rush into it because I wanted to make a rational decision about who the correct adviser would be for me and my wife. If couples are going to invest their wealth together, they should go to see the adviser together.

It's usually suggested one interview a few advisers before choosing someone. How many people did you interview?

I interviewed 10 people once, I did three a second time and then I made my selection.

Where did you find the names to interview?

I worked purely from websites. The majority of advisers have personal websites under the umbrella of their firm. I looked at a number of advisers at each individual firm – before long you can tell whether they're using the corporate-speak from their firm's marketing department.

I look for a different articulation of the story of the adviser – what they believe in and what makes them different. Looking at individual sites, you can eliminate 75 per cent to 80 per cent of advisers.

What were you looking for?

Two key things I look for in an adviser are a meeting of the minds, and a meeting of the hearts. With every single adviser, I said, 'Tell me a little bit about yourself.' I'm looking for them to open up, and I expect them to ask me the same questions.

What if they don't?

That tells me an adviser is not very good at relating to personal questions, and all too many issues we have as investors involve personal aspects of our life. If they're not very good with that sort of stuff, I don't want to deal with them.

At what point in the interview process did you raise the issue of fees?

Right at the very end. I just said, 'What does all this cost?'

How much did annual fees vary from adviser to adviser?

Hugely. (Mr. Monteith said in an e-mail that the fees he was quoted ranged from 0.8 per cent to 1.75 per cent for his seven-figure portfolio; the adviser he chose was the one at 0.8 per cent.)

What's the trend in terms of there being add-on fees for things such as trades or custodial services?

They all claimed their fees were all-inclusive.

In your interviews, what things did advisers do that turned you off?

They'd go right into things such as performance. Performance is only an issue in the absence of perceived value. If someone's bragging about 10-per-cent-plus performance year after year, that's a bad signal.

Can you tell us something that impressed you about the adviser you eventually chose?

In our first conversation, he said, 'Tell me a little about your life, Colin.' I went, okay, another box ticked. And then he said, 'We're not talking about investments at the first meeting.' A big plus.

What was your experience with advisers offering financial plans?

They all claim to be doing financial planning, but I know there are different levels of that. I was looking for someone who would take me through to the very end [of life] – financial planning and estate planning.

What was your thinking on how many clients your adviser should have?

I wouldn't touch an adviser with more than 400 clients, unless there are multiple people on the team. There are advisers out there with thousands of clients, and they're sole practitioners. No way can they handle that. I automatically dropped people like that.

Did you do any sort of a background check on the advisers to look at whether they have ever been professionally disciplined?

I did a check on disciplinary actions, and I did a straightforward Google search, as well. That's an important thing to do, as well as looking at an adviser's personal website. Just google someone and see what stuff comes up.

[Note: For advisers at full-service investment dealers, you can look up background, qualifications and disciplinary information on the Investment Industry Regulatory Organization of Canada website; also check the disciplined persons list maintained by the Canadian Securities Administrators.]

Did you ask for references?

I did ask one adviser for references. He said, 'Here's a client list of people who have given me authorization, pick whichever one.' I did follow up with one client, and the comments were exceptional. He wasn't the adviser I went with, though. In the end, I went with someone I felt more comfortable with. I knew him by reputation.

Can you share your thinking on downtown versus uptown advisers?

If you're a suburban person, retired, how can you relate to some high-flying guy downtown? The mindset is fast-fast, click-click, very quick thinkers. They tend to leave some of their older clients with their heads spinning. The suburban adviser can be a little more grounded, a little more willing to spend time.

Based on your experience, how big does your portfolio need to be to get a decent level of attention from an adviser?

Realistically, the adviser is probably going to be looking at $150,000 to $200,000 plus. Most advisers will look at total household portfolio values. Some will turn you away with anything less than $500,000. I wouldn't get too hung up on portfolio size. Most advisers aren't as hung up on this as some people think.

What do you think about online advisers (a.k.a. robo-advisers) for small and starter accounts?

I think there's a natural place for robo-advisers. It depends on someone's ability to understand risk. If it's not great, I'd go with a robo-adviser. If you have the ability to understand risk, go direct and do it yourself.

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Colin Monteith in brief

Born: 1952, in Glasgow

Start in the investment industry: 1968, in Scotland

Comes to Canada: Takes a back-office role at Pitfield Mackay Ross in 1981

Next stages: Worked as an adviser at Burns Fry; in management at BMO Nesbitt Burns for 27 years; then consulted

Portfolio size: Seven figures

His philosophy on …

Finding a compatible adviser: "I really like advisers who connect with me by talking about my life goals, what do I want my money to do for me, my family and my financial legacy."

The location of the adviser's office: "I wanted someone local that either or both of us [his wife included] could visit easily, so location was important. There is also something emotionally different about advisers downtown and those outside of the core."

How fees charged by advisers vary: "What the stats don't clearly show is the spread between advisers not only in the same firm, but at the same branch."

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Editor's note: An earlier version of this column incorrectly identified an organization as the Investment Industry Association of Canada. In fact, the database on background, qualifications and disciplinary information related to financial advisers at full-service dealers is offered by Investment Industry Regulatory Organization of Canada.