How to choose a financial adviser, notes from The Intelligent Investor

Originally published in 1949, this is a 75th anniversary, third edition update, with commentary  by Jason Zweig. This book has remained the most respected guide to investing. In it Graham’s timeless philosophy of “value investing” helps protect investors against common mistakes and teaches sensible strategies to serve investors throughout their lifetime.

When picking a learning book, I always take note of the author. A book by an influencer is going to land differently than a book by an expert and this book is an excellent example. It was originally authored by Benjamin Graham (1894-1976). He was one of the greatest investors who ever lived, the father of financial analysis and value investing. The latest edition has modern commentary by Jason Zweig, an investing columnist for the Wall Street Journal.

This is a great book but it is not for the lay person. When the preface is a quote by Warren Buffet calling this “By far the best book about investing ever written”, that should tell you it’s not a beginner’s crash course in how to. 

Investing is an area I know next to nothing about and even though I enjoyed learning via a very well written book, I felt lost a lot. The tables and graphs may as well have been written in Kanji. It’s written for those well versed in investing.

I found Benjamin Graham’s chapters the most difficult to grasp, whereas Jason Zweig’s commentary chapters were the highlight for me. They were easy flowing, took on a more conversational explanatory tone and I found myself tagging mostly in his sections.

Despite being out of my depth, I really enjoyed reading this book. Challenging myself this year to get through one learning book a month was really put through the test with this 533 paged whopper. Of course I chose a 30 day month to read it in and this meant committing to 18 pages per day. Not so easy when you are not familiar with the contents. I felt like I was truly learning and came away feeling richer for it. 

There are so many shareable parts of this book, but I really enjoyed Jason Zweig’s commentary on Chapter 10: The Investor and His Advisers. On page 264 he sets out a guide on how to search for an advisor and it really stood out to me as a great resource for anyone who either has a financial adviser or is looking for one.

Know what you need. i.e. An adviser who manages your investments or one who would help with all aspects of financial planning.

Insist on an adviser who will act as a fiduciary – one who has an obligation to provide advice in your best interest and disclose all costs and conflicts of interest.

Do a background check. You’re looking for any disciplinary history for the adviser and their firm. This includes customer complaints, lawsuits, criminal cases and bankruptcies.

Research their fees. In the book he lays out how different fees indicate how they trade.

Interview them. Once you have 3-5 narrowed down he suggests you interview them with a list of questions he provides. He also includes what their answers should ideally be.

Rate the answers and score each adviser on the same scale. Hire the one who ranks the highest.

You are intensely interested in investing and want to learn how to think for yourself, instead of letting millions of strangers tell you what to think.

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