Click below to listen to Episode 3 – Virtues to Look for When Choosing a Financial Advisor
Episode 3: Virtues to Look for When Choosing a Financial Advisor
How do you choose a financial advisor? It’s not just about experience (although experience is important), but looking for a financial advisor encompasses a variety of areas including client relationships, truthfulness, openness, and if they are approaching your financial portfolio from a holistic perspective.
Also, just because an financial advisor is a Christian, this does not make their business a Christian financial firm. Are they instituting Biblically or morally responsible investing? There are many Christian financial advisors who work in, or even own, a wealth management group, BUT do not incorporate Christian principles into their financial portfolios. If in doubt, just ask!
HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode
CIS Wealth Management Group
Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®
Want to ask Bob or Mary Jo a question about your specific situation? Schedule a complimentary 15 minute phone call.
Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.
Mary Jo: And I’m Mary Jo Lyons.
Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?
Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.
Mary Jo: Hi Bob. It’s been a rainy few days here in Houston. How are things in New Braunfels?
Bob: Oh, it’s really nice. We had the same thing. I think that same rain came through here last night and we really need it. It’s been so dry recently.
Mary Jo: Well, just yet another example of God’s blessings. We do need that rain this time of year. So today in our episode on Christian Financial Perspectives, we’re going to discuss 14 virtues to look for when choosing an advisor. So let’s get started
Bob: And we’re going to use 1 Timothy 3. I know that most of you are probably driving on your way to work or you might be in your kitchen making a nice hot meal, but if you do have the availability of picking up your Bible and following along with us, we’d love you to open up to 1 Timothy 3, and you know, Mary Jo, what I’d like to do, I’d like to just read it first and then let’s go back in and dissect that. How’s that sound?
Mary Jo: That sounds great.
Bob: All right, so first Timothy 3, and I’m reading out of the New American Standard. “It is a trustworthy statement if any man aspires to be to the office of an overseer, it is a fine work he desires to do. An overseer then must be above reproach, the husband of one wife, temperate, prudent, respectable, hospitable, able to teach, not addicted to wine or pugnacious, but gentle, peaceable, free from the love of money. He must be one who manages his own household well, keeping his children under control with all dignity. But if a man does not know how to manage his own household, how can he take care of the church of God. And not a new convert so that he will not become conceited and fall into the condemnation incurred by the devil. And he must have a good reputation with those outside of the church so that he will not fall into the reproach and snare of the devil.” So, what we’re going to do today, Mary Jo, is we’re gonna look at this passage from 1 Timothy 3 here on Christian Financial Perspectives, and we’re going to take these words right off the scripture and apply them to using these virtues for somebody that may be looking for a financial advisor. We’re gonna use these biblical guidelines.
Mary Jo: That’s great, Bob. I think one of the things that might also be helpful before we kind of move in that direction, let’s just look at what a virtue is, what the definition of a virtue is, and the dictionary just simply refers to it as behavior showing high moral standards. And traditionally, there has been a list or paragons of virtue and those are known as goodness, virtuousness, righteousness, morality, integrity, dignity, rectitude, honor, decency, respectability, nobility, worthiness, and purity. I think these things are certainly not new. They have been with us since the beginning. And even if you go back to the Greek philosophers of Aristotle and Plato, they focused on the four virtues – prudence, justice, fortitude, and temperance. The Bible takes it even further. And especially in Timothy three, as you described.
Bob: You know, it’s so difficult for our listeners when they are looking for a financial advisor to help them with financial advice. I mean, who do you trust? This is one of the hardest things to do when it comes to ‘who am I going to trust with my money?’
Mary Jo: Well, and as we look at these virtues and the first book of Timothy and what it says, these are regarding our church elders, the overseers, and deacons. And if it’s kind of good enough for them, then I think that these virtues would apply in looking for a financial advisor, wouldn’t you agree?
Bob: I would and I cannot see how you can get hurt at all by following these scriptural guidelines of what we use in the church today for a deacon, overseer, or elder in the church.
Mary Jo: Exactly, and you know, Bob, one of the things I wanted to touch on, depending on which Bible you picked up, you encourage the listeners today to jump into their Bible and follow along with us if they have it available. As you were reading, one of the things I noticed is that the language in your Bible version is a little bit different than mine. I like the New Living Translation because it’s just easier to read. It’s a little newer. The words are not such tongue twisters, but it’s not quite as traditional. What version of the Bible do you particularly like?
Bob: Well, I like the New American Standard. I used to like the NIV, New International Version, a lot, but I really like the New American Standard now.
Mary Jo: There are going to be some differences and so I just encourage our listeners to recognize that as they read through the scriptures. Our words may be a little bit different than what they’re actually reading, but the intent is still there.
Bob: Absolutely, and as you break down the virtues that are in 1 Timothy 3:1-7 that I read, there’s actually between 12 and 14 virtues, depending on how you look at it. So you can see what I did. I went through and I pasted the scriptures and then I went and highlighted these areas that really come out on the page. So as somebody is looking for a financial advisor, I want them to look for these virtues and I believe it’s really going to keep you from falling into a problem with maybe choosing something or the financial advisor putting you in something that you shouldn’t have been put into. Because a financial advisor that’s going to follow these virtues, I believe, is going to do the right thing for you, not just for them.
Mary Jo: That’s exactly right. In the first one, it actually states they must be above reproach.
Bob: And when you think about that, above reproach, what does that say to you, Mary Jo? I’m just wondering
Mary Jo: That they are held to a higher standard. In our business, we call that a fiduciary standard and that just says that everything that we do must be in the best interest of our clients. Whereas a brokerage or a registered representative is held to a suitability standard. They are only required to recommend investments that are suitable for you. An investment can be suitable and still not be in your best interest. These legal standards are quite different. We believe it’s important for you to understand these differences. Bob and I are often asked what’s the difference between a registered investment advisor and a broker or registered representative? So I thought it would be helpful to expand on this a little. Another point of difference is registered investment advisors must also disclose any conflict of interest that may arise when making a recommendation. A broker is not required to do this. We are also paid a fee by you, the client, so our only motivation is to recommend investments that help you achieve your goals and objectives. Brokers, on the other hand, are often paid a commission on products they sell. Some brokerage firms offer higher pay outs on proprietary products over other similar products or investments. This practice has the potential in creating a conflict of interest. These products, while suitable to you as the investor, may benefit the firm more than other similar products. Now, I’m not saying that brokers are bad, but the potential for product bias is certainly there. Having spent many years in the brokerage industry, I have seen firsthand where employers incentivize employees to promote certain products over others by paying higher commissions. And human nature being what it is, this practice can’t help but influence some recommendations.
Bob: The second one that we have here is “faithful to his wife”. Today, I’d say faithful to his spouse because you’re a female advisor, and there’s more and more female advisors coming up in our business, which I’m very thankful for. This is a person that is not out carousing around, you know, a faithful person that shows loyalty
Mary Jo: Well, loyalty can be looked at in a number of different ways as well, but especially to a spouse. And I think it speaks to character above all else.
Bob: The third characteristic that we have is “exercising self control”.
Mary Jo: Living wisely.
Bob: And not doing what you want to do, but doing what the right thing is to do.
Mary Jo: You know, you want an advisor who is following their own medicine, if you will, that they are living within their means, that they are investing in the same principles and the same strategies that they’re encouraging you to follow. We follow a biblically responsible investment strategy, and I think our clients want to know that we are investing that way as well. And we certainly are.
Bob: I don’t know why I skipped over, I went from self control to having a good reputation, but then there’s “live wisely” right after self-control.
Mary Jo: Yes. Well I think those are kind of married together, if you will.
Bob: Yeah. Living with wisdom and God’s wisdom is so different than the world’s wisdom, and then the next one is a “good reputation”. Well, that’s pretty obvious, but it takes a long time also to get a good reputation. It just doesn’t come overnight. It comes over time.
Mary Jo: It can go away overnight, though.
Bob: Well, it sure can. You can slip just one time and hurt a lifetime of building a good reputation. And that’s why as Christian brothers and sisters, we must be very careful and continuously stay in God’s word and continuously be in tune with the Holy Spirit to guide us to not make stupid mistakes. I think it’s interesting how it has “live wisely” in that passage. This is the third verse of 1 Timothy 3. Live wisely is right before having a good reputation. Definitely those two go together because when you’re living wisely, you’re not going to be doing stupid things that’s going to hurt your reputation.
Mary Jo: Well and it also goes in with number one above reproach. So all of these are just, they’re overlapping. They’re integrated and it really just describes a whole being, if you will. I think the next one is that they are “able to teach and a good teacher”, and I think we have shared with our listeners in the past that I know I’m a teacher at heart and I really pride myself on taking my time to explain concepts, lingo, and jargon and make sure that clients are coming along with me and they understand what they’re doing, why they’re doing it, how they’re doing it, and that no question is a stupid question. I like that approach.
Bob: I’m so in agreement with you there, and I have had people that have sat across the desk from me and said, “I really like it, Bob, because you explained to us,” and I have the heart of a teacher too. As you know, that’s why we’re doing this program. We have the heart of a teacher. But when you’re choosing an advisor to help you, you want one that has the heart of a teacher so that they don’t mind explaining. They actually enjoy explaining the details to you and helping you to understand it. Because I want those across the desk from me to understand what they’re getting into. If you’re getting into a growth portfolio, you need to understand the risk associated that and when you hear the term, ‘things are guaranteed’. You need to understand, well, wait a second. That’s a very hard word to say that something’s guaranteed because really there’s no guarantees in life.
Mary Jo: Certainly not in our business.
Bob: How does that circle around? How do I teach that? Things are not guaranteed, but if you manage it with wisdom and don’t be an over spender and don’t be foolish with what God’s given you, it can last a lot longer.
Mary Jo: When you’re talking about being able to teach, I’ve heard so many of my women clients that have come and said, “My advisor, they talk down to me all the time.” And you don’t want that. So you want somebody who is explaining things in language you can understand, but at the same time is not being condescending.
Bob: How about this other one? Another one I found as we’re just digging in and getting into God’s word in this scripture is “he must enjoy having guests in his home”. Now that’s interesting that that’s put in there, and that really is about being hospitable.
Mary Jo: And that that’s a virtue.
Bob: Absolutely it is.
Mary Jo: Well I think that describes both of us. We both love entertaining and you know we’ve entertained each other in our homes and clients as well and it just means that you are comfortable relating to people, I think.
Bob: That you love people.
Mary Jo: Yes.
Bob: So when you’re looking for an advisor, you want one that’s above reproach and faithful and exercises self control and is wise, but you also want one that just likes people because that’s such an important thing. If you’re going to be working with somebody for years to come, you want to be able to get along with them and that you will love each other and help one another through those tough times.
Mary Jo: And you know Bob, these next two are kind of interesting and pretty well self-explanatory. You want someone who is “not a heavy drinker or violent” because that can certainly get in the way of their judgment.
Bob: It most certainly can, and that’s something that you can easily ask or you can watch. That’s where a good reputation is going to come into play, that somebody is not out heavily drinking and that can take you to violence and it’s interesting how those two go together, isn’t it?
Mary Jo: It is, and the signs are there. Also, to be “gentle and not quarrelsome”. I think, again, that speaks to our demeanor, our ability to communicate, and be able to have a dialogue. One of the things that I view my approach with clients is very consultative, and I want to engage with them, not lecture them. That quarrelsome – I find that fairly interesting. What about you?
Bob: Yes. You don’t want somebody who’s going to be argumentative with you but is going to guide you along without making you feel like you’re stupid.
Mary Jo: Yeah. Nobody wants to feel stupid.
Bob: That’s exactly right. The next one is “not love money”, and I think this goes so well with choosing a financial advisor. Money’s not evil, but it’s the love of money that is evil and if the advisor only cares about themselves and is trying to put you in a high commission financial product, that’s where this can really help you look for one that is not all just about the money.
Mary Jo: Well, there’s nothing wrong with being successful. You want an advisor who has been successful, who obviously has inspired other clients. Well, I think we all want to be associated with someone who other people want to be with. It validates our decision as to which advisor we choose. But on the other hand, I think you also want to be wary if your advisor has all these outward signs of opulence and excessiveness. To me, that’s a bit of a red flag.
Bob: I’ve seen this a lot in the financial product world of annuities and pushing annuities, which are high commission products. I’m not saying that all, but I feel like a lot of that, has to do with the love of money because when you really dissect those products and look at them, they’re not necessarily good for the client always, and many times they’re not. Everything’s not laid out to the truth of what it really is and how they can get someone stuck in a product like that. But again, I think it comes back to the love of money and that’s why those are sold so much because they pay such high commissions.
Mary Jo: Well and if something sounds too good to be true, it probably is too good to be true. And I think some of those guarantees – talked about our previous lives being on the radio and we’re doing this podcast now – I listen to talk radio a lot on my off time and sometimes I’ll hear these financial shows on the radio and they’re talking about these 8% and 10% returns, and you can never lose money. And I’m like how can they get by with saying that? Because we cannot do that. That’s that guarantee you were speaking of earlier. But I think that in today’s market, when you look at the average return and what the overall market is doing to make these kind of outlandish promises, you know that somebody’s getting paid somewhere and it’s probably not the client.
Bob: Well, Mary Jo, we’ve got about three or four more of these, but because of time’s sake, we’re going to have to get through these pretty quick. I can’t believe we’re already at this far into the program, but “not be a new believer”.
Mary Jo: You want them to have been a follower, a Christian, for the majority of their life. You don’t want somebody who’s a recent convert. I think then they’re not going to have those biblical foundations that we look for that are so important.
Bob: And this is when you’re looking for a Christian financial advisor that we want to mention this, too. We want to make sure that everybody understands this is where we’re coming from is picking a Christian financial advisor to help you.
Mary Jo: And that they are well respected and bring integrity.
Bob: And there you go. So that is about 14 or 15 virtues from the first chapter of Timothy, and when we were talking about the love of money, by the way, that’s just three chapters over in 1 Timothy 6:10, “For the love of money is the root of all sorts of evil.” And remember it’s the love of money. Money is not evil in itself, but I wanted to point that out as we were going through all these, that that particular famous scripture is just a few chapters over in the same book.
Mary Jo: You know, Bob, there’s another scripture that is also kind of important to touch on as we talk about these virtues for looking for a financial advisor. And that’s Matthew 7:15, the tree and its fruit which says, “Beware of false prophets who come disguised as harmless sheep but are really vicious wolves. You can identify them by their fruit. That is by the way they act. Can you pick grapes from thorn bushes or figs from thistles? A good tree produces good fruit and a bad tree produces bad fruit. A good tree can’t produce bad fruit and a bad tree can’t produce good fruit. So every tree that does not produce good fruit is chopped down and thrown into the fire. Yes, just as you can identify a tree by its fruits so you can identify people by their actions.” So we’ve heard it said that actions speak louder than words, but maybe there’s a bad apple in every bunch. What do you think about that and how it relates to our topic today?
Bob: I think that as clear as the handwriting is on the wall, as the old saying goes, and you must be aware of that because there are those out there that are very good at trickery and can trick you into thinking that this is the right thing for you and that’s why you must rely on the Holy Spirit and that’s why for a Christian, all financial decisions should be spiritual decisions as well and should be prayed about. Mary Jo, as we come to the end, let’s just go over some things quickly and kind of sum this up. Things to look for. I know you’ve put together a little list here that I think is really great. Why don’t you go through those?
Mary Jo: Well, certainly education and experience. You want certification so that there’s some credentials there that speak to their expertise and what you’re looking for them to help you with. You want to review their fee structure if there are any conflicts of interest. One of the ones that I think is so important is that they are independent versus being beholden to a brand or a firm, and what I mean by that is if there’s a name on the door and it’s not their name, then whatever firm their associated with, more than likely they are beholden to that firm. It’s kind of like having a franchise and they have to sell that brand of products. You may find that you’re having a lot of those funds in your portfolio because the advisor is steered towards that. Typically ,they get more compensation by using those investments, and you know our clients are unique individuals and their portfolio should reflect that.
Bob: That’s correct.
Mary Jo: We talked earlier about the standard of care. You’re looking for a registered investment advisors or certified financial planners. You want to make sure you’re working with a fiduciary and you also want to understand what’s going to be the working relationship with the firm. How often is the advisor going to meet with you? What are those reviews going to look like? What other services do they provide? On our website, we have a list of all the services and what are the benefits of being a CIS Wealth Management client. You can go find that on CISwealth.com. Also, you want to look, are they offering holistic planning or just simply investment management? Your portfolio is only one piece of your overall financial wellness plan. Are they helping you with an income stream? Are they helping you with retirement planning, other financial planning topics, education, funding, and certainly planned giving? Do they have expertise in those other areas?
Bob: And don’t worry, we’re going to spend a whole other show talking about all the pieces of the financial puzzle.
Mary Jo: Exactly. You want to make sure that they have an investment philosophy and an investment process. Are they disciplined in their approach and consistent? Another key thing is do they have a team in place or are they a solo practice? Something can happen to the advisor and God forbid something were to happen to either one of us, but our clients are in great hands because we have a team in the office to help support them. And if I’m not available, there’s always somebody available to answer their questions. And lastly, you want somebody who is technology proficient. Do they have online tools and online website for you to go to? A client portal where you can securely post documents? I think that’s just a snapshot of some of the things you should be looking for. What did I miss, Bob?
Bob: I think you hit on them all, but I know that our listeners are going, “Oh, that’s so many things.” We’re going to put this list on the Christianfinancialpodcast.com website for Christian Financial Perspectives. Mary Jo, we’re out of time, so we’re going to need to sum this up for today. I want to thank you for listening to Christian Financial Perspectives. Any last thing you’d like to say, Mary Jo?
Mary Jo: Just very quickly, I do know that clients come and they’re not always looking for an ongoing relationship with an advisor, so sometimes they only have a few financial topics that they want to address and we offer what I call a quick start financial plan. If somebody just wants to look at their insurance needs or maybe talk about education funding or just some simple retirement strategies, we can customize our financial planning to an hourly consultation, and not every advisory firm has the ability to do that so we have more details about that on our website as well.
Bob: Thank you for listening to Christian Financial Perspectives and please join us next week as we explore “Estate Planning, The Right Way And The Wrong Way.”
Mary Jo: Who will you be a blessing to you this week? Until next time.
Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.
Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.
Mary Jo: That’s all for now.
Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA CIS Wealth Management Group, a registered investment advisor.