Why Would I Hire You? A Financial Adviser Answers a Friend’s Pointed Question
Financial advisers and doctors have a common occupational hazard: Friends and acquaintances often want free advice. When asked point blank, “Why would I hire you?” here’s what one financial adviser had to say to his friend.


“Why would I hire you?” With our wives and children inside a friend of mine poses this question in a relatively strong tone. We were sitting by the fire watching basketball playoffs and his question, one I answer regularly, somehow brought a flurry of simultaneous thoughts. There was so much I wanted to say.
Then he restated himself, “like truly, why would I hire you if the returns are the same?” Specifically, Dan (changed name for this article) was asking why he should hire my firm and me to manage his 401(k) rollover.
Here’s some background, over a couple years I had offered several suggestions as a friend to Dan. Dan is not a formal client but had recently inquired about investing his rollover in a casual conversation at a social gathering. That conversation led to a visit in my office and to discussing some investment options. I ultimately proposed half of his portfolio be allocated to a SMA (Separately Managed Account), which had a three-year past performance equivalent to his current 401(k), but with much less risk. Dan’s current 401(k) allocation is 99% equities. However, my suggestion reduced his standard deviation (a measure of risk) by 27%. The other half of my proposed portfolio would be allocated into our firm’s Qualified Aggressive Growth Model, which incorporates stocks, ETFs and institutional share class mutual funds.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
A Helpful Heads-Up on a Backdoor Roth IRA
What gave me such great pause to the question was a few other interactions we had in the recent past. One example was sitting around our kitchen table with Dan and another friend, Chris. Chris was inquisitive about my work and was interested in various retirement savings vehicles. Ultimately, I introduced how the “backdoor Roth IRA” strategy works and its potential benefits. To which Dan says, “What?! Why hasn’t my adviser at the bank told me about this?” Dan went on to text his adviser to look into it.
As an independent adviser, I commonly look for subtle ways to educate and add value in a hope that a prospective client will acknowledge the potential benefits of becoming a client. The next day I followed up with Dan about some details on the Roth conversion strategy and some pitfalls to avoid. I don’t recall receiving a reply, so I let it drop. It can be awkward re-approaching a friend when the ball is in their court, and I do my best to be conscious of boundaries.
Some Advice for His Dad’s Estate
Some time had passed between that interaction and the meeting in my office to discuss Dan’s possible rollover. I was encouraged that he approached me to talk, even if it was just as a friend, not a client. Dan’s father’s property has also been a topic of discussion. Dan is the executor for his father’s estate, and they are at the stage of making end-of-life arrangements. I thought to myself, “OK, I am glad I am here and can add more value for a friend.” I then introduced the importance of having updated beneficiaries and TODs on Dad’s assets to avoid probate. His dad lives in Pennsylvania, and a sizable portion of the estate is the house and the acreage it sits on. Pennsylvania does not allow for TODs on real estate so there are advantages in cost, time and privacy to having the property transferred to a living trust.
Dan and his wife were receptive. They asked questions and even wanted to discuss it more in subsequent interactions. Dan’s wife mentioned they were hesitant to talk about this with his Dad and the rest of his family and asked for suggestions on how to approach them. I was happy to offer additional insights about responsibilities of an executor, stressing the potential headaches of probate and recommended involving an estate planning attorney to assure things are in proper order.
A Rude Awakening at Dinner
After all that friendly advice I gave Dan and his wife, what came next stung. While having dinner together one night, Dan’s wife looked at me and commented that an advisory fee seems like the equivalent of stealing. OK, wow! There it is.
At the time I laughed it off. But when someone close to you, or anyone for that matter, equates what you do to stealing it’s going to bother you, whether it was said in jest or not.
A Frank Discussion of Advisory Fees
So, let’s discuss the advisory fee. Here’s some of what clients who pay me an advisory fee get for their money:
- They receive support with allocation based on time horizon, risk tolerance and current capital markets outlooks.
- They get access to institutional share class pricing of mutual funds.
- They can be assured that as an adviser, I carefully select each stock, ETF or mutual fund and am constantly assessing their relevance within their assigned sleeve(s).
- They may be introduced to investment options they don’t know exist, such as buffered ETFs or Unit Investment Trusts.
- There is diligence that goes into rebalancing and value when doing so during emotional times in the markets. Holdings are replaced when appropriate, such as when there is a run-up on a stock, an investment objective change or a change to the fund manager, etc.
- There may also be advice related to tax loss harvesting, offsetting gains and tax-sensitive investing.
- There could be suggestions to dial risk up or down depending on market conditions. Ultimately the goal is to outperform.
- They get an ongoing interaction with a credentialed and licensed adviser with over 20 years of successful industry experience.
Phew, I got it most of this off my chest … but there’s more! Dan had previously asked whether his wife could roll over the cash value of her pension plan to an IRA and trade stocks. I subsequently learned she had, in fact, executed that rollover but to her bank adviser. On yet another subsequent visit with them, self-directed stock trading came up, and I mentioned access to no-cost trading. That was news to our friends. The rationale as to keeping the funds at the bank and paying $10 per trade was, “It helps him, and we’ve known the guy forever.”
‘Why Would I Hire You?’ Well, Here’s Why
Back to the original question, “Why would I hire you?” Let’s revisit some previous points related to Dan’s case: I introduced and educated you on how the backdoor Roth IRA works, I called to light the significant impact of Pennsylvania estate law and suggested a pivot, I identified that your 401(k) didn’t have a listed beneficiary and that you could be trading for free and weren’t aware.
The return on Dan’s 401(k) is just one reflection of the services he would get through a formal client relationship. A more valuable aspect of an ongoing relationship, I believe, would be the education he’d get, stressing the importance of looking forward.
This entire experience reinforced a key belief I have, something I already knew in the past and lost track of: Education has always been paramount in our business, and value for advice is realized when there is a consulting fee for that professional advice.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jeremy DiTullio is the founding partner and a financial planner of Cleveland Financial Group, a team of financial planners who have prodigious experience in wealth management, wealth transfer strategies and executive-focused planning. He serves clients in 20 states throughout the U.S.
-
Ten Cheapest Places to Live in Texas
Property Tax Looking for a cheap place to live in Texas? Look no further. These counties have the lowest property tax bills in the Lone Star State.
-
AI Is Missing the Wisdom of Older Adults: What It Means for You
AI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth
Consistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key Pieces
If retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or Relocate
Homeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What Happens
Combining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden Risks
Potential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid Off
Life insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.