Choosing a Financial Adviser: Why Five-Star Reviews Aren't Enough

Most of us read reviews before making a decision.

Restaurants.

Hotels.

Electricians.

Books.

I do exactly the same.

Reviews help reduce uncertainty.

So it's hardly surprising that many people also rely on reviews when choosing a financial adviser.

At first glance, that seems perfectly sensible.

But the more important the decision becomes, the less convinced I am that reviews are enough.

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Why I've been thinking about this

A five-star review tells you one important thing.

Someone else had a good experience.

That's valuable.

But it doesn't tell you whether you'll have the same experience.

Financial planning isn't like buying a coffee machine or booking a weekend away.

You're not simply purchasing a service.

You're choosing someone to help you make decisions that could affect the next twenty or thirty years of your life.

The adviser who was perfect for someone else may be completely wrong for you.

One client might value detailed technical knowledge.

Another might want someone who challenges their thinking.

Someone else may simply want reassurance.

The "best" adviser depends on the person sitting opposite them.

That's why reviews should probably be the start of your research, not the end of it.

The more important the decision, the more personal the due diligence becomes.

Instead of asking:

"How many people liked this adviser?"

Perhaps ask:

"How does this adviser think?"

"How do they make decisions?"

"What assumptions do they challenge?"

Those answers are much harder to find than a star rating.

But I suspect they're also much more important.

I've been left wondering...

If choosing a financial adviser is one of the biggest financial decisions you'll make, why do so many people choose one in the same way they choose a restaurant?

Transcript

"Can I ask you a question?"

When you're looking for a restaurant...

do you read the reviews?

I do.

Probably every time.

But then something occurred to me.

People often choose a financial adviser in exactly the same way.

Reviews.

Recommendations.

Five-star ratings.

The trouble is...

a great review tells you someone else had a good experience.

It doesn't tell you whether they're right for you.

Perhaps the biggest financial decisions...

deserve more than a star rating.