What are the factors to consider when choosing a financial advisor?
Interview with CRA Financial
Introduction and Interview by David Wagstaff
This interview with Matt Reynolds is part of a series of articles from entrepreneurs compiled to provide other business owners, and soon-to-be business owners, with a realistic view of what it takes to run a business and some of the challenges commonly faced.
We are happy to report CRA Financial is also a new sponsor of EntrepreneursNet.
I had first learned about CRA Financial in 2012 when I interviewed for a position as Director of Operation at their sister business, Capaldi Reynolds and Pelosi (CRP), CPA’s. I was immediately impressed by the whole team. As I worked with CRP, I learned more about CRA Financial. Historically, I had been skeptical of financial advisors. My experience in the past was that financial advisors often made trades, at least in part, based on their own self-interest instead of purely focusing on the client’s interest. What I learned through my experience with CRA Financial is that financial advisors can be SEC or FINRA registered.
FINRA registered representatives can be compensated by commissions and fees from the investment recommendations they are making. These include fees that are not always easily visible to their clients. While it may look like they are not paying for the advice to a client, it can be hidden in management fees or other fees paid by the investment to the advisor.
SEC registered investment advisors are compensated by fees from the client, not commissions. This makes their investment advice aligned with their customers. They earn more fees when the account balances grow and not through the investments they make on behalf of their clients.
CRA Financial, LLC was formed to give our customers a more personalized alternative to traditional wire-house brokerage firms. CRA is an SEC-registered investment advisor. We provide personal financial planning as a practical tool to help you achieve financial security and peace of mind.
CRA Financial even takes this a step further by declining any fees or perks from firms with whom they work. For example, many investment advisors will let the firms they are recommending pay for client development events and other similar events. This creates a potential conflict of interest; therefore, an advisor might be more tempted to make a recommendation based on the firm that provides the biggest perk.
Learning this made a big difference in my confidence to be able to trust the advice CRA Financial provided. I also knew from firsthand experience that they were able to produce excellent returns for their clients.
While fees and trust should be the primary reasons to choose an investment advisor, two other factors should be considered.
- Realized financial returns are a factor your investment earnings and the taxes you pay on those returns. Both Matt and Tom are CPA’s who have years of experience preparing and reviewing tax returns.
- Likability and comfort with your advisor are also important factors in determining an advisor. You want to feel comfortable sharing details of your personal financial life and aspirations with your advisor.
I personally found all four of these factors (SEC Registered, Investment decisions aligned with my interests, tax savvy & likeability/ confidence) with CRA Financial and moved funds from a low cost self-directed mega provider over to CRA Financial.
Through the interview we are able to learn more about CRA Financial. One of the really important things Matt mentions is the importance of hiring great people. I also love that he mentions it’s important to hire capable and intelligent people. If an entrepreneur is afraid to hire people who are smarter than they are, it can set a precedence in an organization that the owner only hire people they can dominate, which then encourages the managers to do the same. Ultimately this can cause the entire organization to suffer because the employees are not capable enough to properly serve their clients.
The other item I think is important to highlight from the interview is that CRA Financial is only 10 years old, yet they have managed over $700 million in assets. As I recall just a few years ago, they managed less than $500 million in assets under management. That is an impressive feat of growth in such short time from a combination of confidence clients have shown them and the investment returns they have been able to realize for the assets they are managing.
I am completely comfortable recommending this firm as an excellent choice for financial advice.
1) What led you to become an entrepreneur?
My brother and I decided in 1999 that we wanted to get into wealth management and we came to the conclusion that our best course of action to be able to do it, how we wanted to, as fiduciaries to our clients, was to form our own Registered Investment Advisor.
2) A brief description of your business and what are your aspirations for it?
CRA Financial is a fee-only Registered Investment Advisor. We offer a full range of wealth management and financial planning services to our clients. We believe that the foundation for every successful investment plan is a solid financial plan to start. We manage over $720 million in assets for our clients. Our clients consist of high net worth families, small business owners, and small business retirement plans. We custody our assets at Fidelity Investments and Charles Schwab. Our objective for our business is to continue to enhance our product and service offering to our clients so their experience truly becomes life-changing.
3) What have you done with your business that you are proud of or that has worked really well?
Providing our clients world-class asset management and financial planning in a fiduciary environment where we have to put our client’s interest above our own.
4) How did you get into this field of work ?
My brother, Tom, and I were both CPA Partners in our CPA Firm and we knew we wanted to do more financial planning and less accounting.
5) What have you learned and what would you like to share with other entrepreneurs?
The biggest lesson I learned from another entrepreneur is that as an owner the most transformative thing you can realize is you don’t have to be the smartest person in the company, once you accept that, you can start hiring people that are smarter than you and when you do that your company can achieve so much more than before.