Finding your Financial Advisor

 

How do you find a financial advisor that is right for you?

I see many articles talking about how to choose the right professional to work with when it comes to financial matters. Let's face it, this is a very delicate area; one where you will need to feel very comfortable sharing personal information. And how about finding a financial advisor you can trust? You should be able to feel that you can trust the person that you're dealing with to provide you with the best information available according to your needs.

So how do you find this person, and what should you do to make sure he or she is the right advisor to help you reach your financial goals?

FINANCIAL ADVISOR CHARGES

First, let's talk about common terms associated with financial advisors. To start with, how do they charge for their services?

 

  • A “fee–only” financial advisor is paid solely by their clients. They can charge in a variety of ways, including a flat retainer, a percentage of assets managed in an ongoing investment advisory relationship, an hourly charge, and a fixed fee for service.
  • A “fee–based” financial advisor may be paid by both their clients, and a company for which they sell financial products. For example, in addition to work provided directly to the client for a fee, they may also sell insurance products such as annuities and insurance policies. Insurance products will generate a commission to the selling agent, which is standard practice.
  • A “broker”, or “registered representative” may buy and sell securities, insurance, and other investment products. Generally, someone who works in this area is able to sell products based on the licenses they hold. Investment products are sold to clients and generate a commission for the seller.
  • Other categories of investment and financial professionals may include accountants, insurance agents, and lawyers, who charge fees along these lines.

FINANCIAL ADVISOR CREDENTIALS

Second, what does all that alphabet soup mean behind someone’s name?  There are many credentials and specialties that financial advisors can have. 

The most highly recognized are those that also require the most study, a comprehensive board examination and annual maintenance of education: the Certified Public Accountant/Personal Financial Specialist, and the Certified Financial Planner. The Chartered Financial Analyst and the Attorney falls into this category as well. Commission-based advisors also need to pass uniform exams, and maintain their Registered Representative and insurance licenses with continuing education. There are many other specialized certifications that follow: insurance, elder planning, long term care, employee benefits, and tax preparation.  And the list grows. Forbes magazine published an informative article identifying many credentials several years ago.

It's hard to know just how to start when deciding to engage a financial advisor. It helps to understand your reasons why you've decided it's time to act. Impending retirement, handling an inheritance, a job change, a divorce or loss of a spouse, preparing for children's education – these are all triggers for seeking professional help. Identifying your goals is the first step in the process.

HOW TO GET STARTED WITH A FINANCIAL ADVISOR

How do you find the right advisor for your needs? Beyond asking a friend for a referral, there are many resources that will provide you with qualified candidates. Here is a short list to get you started:

  • NAPFA’s Find an Advisor Search provides information about fee-only financial advisors.  NAPFA is an organization that accepts only fee-only advisors that must take a fiduciary oath as a requirement of membership.
  • Find a CFP Professional. The Certified Financial Planner Board provides great information through the media on the importance of financial planning.
  • Advisors who are specialized in hourly financial planning, and are CFPs, the Garrett Planning Network can be found here.
  • The Financial Planning Association has the Planner Search site that will provide access to advisors based on your planning needs.
  • And of course, Google Search will provide you with local listings that can point you in the right direction. You can identify candidates and use the other sites to gather more information.

QUESTIONS TO ASK A FINANCIAL ADVISOR

Once you have started the search, call the candidates and ask direct questions that will help you find the right fit.  You can look up the advisor’s regulatory registration and disciplinary status on the SEC’s (Securities and Exchange Commission) website or use FINRA’s (Financial Industry Regulatory Authority) page for investor education. NAPFA (National Association of Personal Financial Advisors) has information on its website specifically for the public. “Pursuit of a Financial Advisor Field Guide,” available at NAPFA.org is a downloadable book that will help consumers in their due diligence.  It features important questions to ask, and how to evaluate an advisor according to your needs.

THE TRUSTED ADVISOR

Lastly, all of the credentials and certifications aside, do you feel comfortable with the individual financial advisor?  Do they listen to you, seek to understand your questions and provide information in a manner that you can understand and act upon?  The financial advisory relationship should be grounded in trust, concern and working in the client’s best interest. 

Disclaimer: SEC and FINRA compliance regards blogs and social media posts as “advertising,” and as such, information about certain topics may not allow for comments, endorsements, or “likes”.  Comments will be screened and posted if they are considered allowed by compliance regulations.

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