It is important when choosing a financial advisor to select someone who is experienced, has the appropriate designations and education and is trustworthy and reliable.
Choose a Fiduciary
Always choose a fiduciary, a fiduciary is a financial advisor that is legally obligated to work in a client’s best interest. A fiduciary is required by law to manage the clients’ assets for their benefit and not for their own. Not all financial advisors are fiduciaries. If a financial advisor is only held to a suitability standard, they must suggest products that are suitable for you, but they can often be more expensive designed to earn the advisor a higher commission, so they are not really working in your best interest.
Choose a Fee-only Advisor
Fee-only financial advisors earn their money from the fees their clients pay them for their services. The fees can be charged as a flat rate, an hourly rate, or a percentage of the money they manage for the client.
Almost all fee-only advisors are fiduciaries. They work under a fee-only model to reduce any potential conflicts of interest. Since their income depends on their client’s financial success it is in their best interest to make sure they choose financial plans and products that are best for the client.
Commission based advisors earn their money by working as salespeople for investment and insurance brokerages, they are not fiduciaries. They may not always work in the best interests of their clients, the more they sell, the more they make.
Get Referrals
Get referrals from friends, family and professionals that you know and trust. choose a financial advisor who has proven themselves trustworthy and reliable to others.
Choose an Advisor Who Understands Your Needs and is Empathetic
Empathy and competency are important characteristics in an advisor, you want someone who understands your needs and feelings. Allowing someone to manage your finances is something many people find frightening and intimidating. A good advisor should be trustworthy, ask important questions and consider the steps that will help you make progress and manage your money effectively.
A good advisor won’t just tell you what to do, but get you involved so that you are able to make smart financial decisions.
If you are close to retirement or already retired choose a financial advisor that has experience working with older adults as they transition from working life to retirement. Senior care and all its complexities pose different rules and strategies, so the advisor should be well versed in that area. Because of the inexactness in the industry, it is important to do your research and choose a financial advisor who meets your specific financial needs.
What Do You Want Them to Manage
Decide what areas of your financial life you want them to manage. Financial advisors offer not only investment advice, but they can work with you to manage all of your financial needs. This can include retirement planning, debt repayment, recommending insurance plans based on your situation, estate planning, college and trust fund planning for your children, tax advice and more.
Check Them Out
When choosing an advisor do your research by checking their credentials, background, and fee structure. Ensure they have the appropriate designations, a chartered financial analyst (CFA) or certified financial planner (CFP) require their holders to act as a fiduciary. These planners have acquired a vast body of knowledge, have passed an examination, and have agreed to abide by a code of ethics.
Use FINRA’s Broker Check. Broker Check is a free tool to research the background and
experience of financial brokers, advisers and firms. https://brokercheck.finra.org/
Also contact your state securities regulator. https://www.nasaa.org/contact-your-regulator/
Visit the SEC’s Investment Adviser Public Disclosure (IAPD) website. https://adviserinfo.sec.gov/
Use FPA Planner Search. Their database lists everyone who has certified financial planner status and is a member of the Financial Planning Association. Their search box allows you to filter by location, specialty, and fee structure.
https://www.plannersearch.org/
Certified Financial Planners allows you to search by specialty.
https://www.letsmakeaplan.org/
Questions to Ask
When you meet with a prospective financial advisor it is important to take a list of questions that you would like to ask. Think of the meeting as an interview. Be sure all of your questions are answered to your satisfaction.
Are you a fiduciary?
How long have you been working in the business?
Do you specialize in any specific area?
What is your educational background and training?
Have you earned any financial designations and/or licenses? Well recognized standards include Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). The Certified Financial Planner (CFP) designation is considered the gold standard.
Do you have any minimum net worth/asset requirements for clients?
How do you charge for your services?
What financial planning services do you offer?
What type of clients do you usually work with? They should have experience serving clients similar to you.
How often will we meet?
What is the best way to contact you and what is your typical response time?
Do you collaborate with other advisors, such as CPAs or attorneys?
Take the time to do the legwork and choose a qualified financial advisor that you can count on and trust.
The Tech Minimalist 