Don’t want to figure out this money thing on your own? What if you had a trusted advisor to help you along the path? Finding a compassionate, highly-competent advisor who is also a perfect fit is not as easy as it might seem.
Lots of professionals who help people with money are in the marketplace. But how do you find the right one for you? Because I have been a financial advisor for over twenty years now (This is not intended in any way an advertisement for my services), I am going to give you an insider’s insights into finding and hiring someone to help you with this very important part of your life.
I’m providing some links for helpful resources in understanding jargon and asking good questions, but my primary aim is to provide the questions and considerations you need to use in finding the right resource to hire.
First things first
Do your homework. Getting a referral from a trusted friend or family member is usually the best approach in finding an advisor. But don’t stop there in your vetting process. Depending on what type of advisor you’re considering, pull up the regulating bodies associated with that type of financial advisor and look them up. BrokerCheck is a good place to start for checking out advisors associated with investing.
Realize this is a potentially long-term relationship. Some transactions are fairly short-lived. As a result, when you don’t particularly like the person you are dealing with, you’ll be looking for someone else. Your goal for finding a financial advisor should be to identify someone you’re happy to know and work with for a very long time.
If you’re with a financial advisor who might not be the best fit, by all means find someone new. Remember a good financial advisor is going to learn about you and know a great deal about you. Make sure you find an advisor with whom you enjoy spending time.
Figure out what services you need and want. For example, do you mainly have tax questions? If so, a CPA may be the right professional. The CFP Board has a basic but informative resource for understanding the types of financial advisors.
For a broader, more comprehensive look at your financial life, seek out the services of a Certified Financial Planner™ (CFP®). Of course, since I am a CFP, I am biased! A competent CFP will look at your whole financial life and make sure your ducks are in a row, as opposed to only specializing in one area. If needed, after consultation, a CFP can refer you to specialists.
How will you be charged for their services? Will you pay an hourly fee, or a fee based on a percentage of the assets managed? Is there no ongoing fee, but rather a commission paid to the advisor when a transaction happens? I have my bias here, too, but there is no single correct method. Much will depend on the services and products you need. I would not discount working with a commission-based advisor until I dug in and really understood the product and whether it fit my needs.
And how are THEY compensated? Along the same lines, how is the advisor him/herself compensated? Are they on commission or do they receive a salary? Do they receive any other compensation related to the work they would do with you? Dig in and feel free to ask. The red flag to look for is a conflict of interest. Will the advisor make more money recommending one investment over another?
Ask a ton of questions. Don’t hesitate to ask the advisor about his/her own family or background. Likely, you’ll know (and hopefully love) this person for many years. Feel free to ask questions related to the profession. The CFP Board has a helpful list of possible questions. Ideally the conversation goes well and it’s easy to ask personal questions: Where are you from originally? Do you have family?
My final criteria
Transparency. How open and willing are they to answer your questions? No matter what sort of transaction I am considering, if the person won’t clearly lay out what the transaction will cost me and show me in writing, I’m not interested. The right advisor for you should have nothing to hide. He or she should be eager to lay bare all the details you want to know and back those details up in writing.
Comfort level. How did you feel when meeting with the advisor? Did you feel relaxed and comfortable, confident the advisor knew his/her stuff? Was the advisor friendly and relaxed as well and interested in you? Were they more interested in you than in talking about themselves or their process?
Hoity-toity or down-to-earth? This is my personal bias, but I’ll take a no-nonsense, down-to-earth person over a pretentious know-it-all any day. Did the advisor talk down to you or talk to you as a peer? Did he/she use a lot of confusing jargon to impress you or was his/her language easily understood?
Do they care? Do you get the sense that the advisor genuinely cares about his/her clients? This is a big mandate for me. Ask for referrals and call and speak with current clients to find out their experiences working with this advisor. Do those clients feel cared for?
The bottom line is that a financial advisor will probably be in your life for a long time. View the initial stages in the same way you’d evaluate a new friendship. If the person makes you feel uncomfortable or like a moron, why would you hang out with them?
Of course, you want someone competent, but don’t overlook these other critical aspects. You want to be able to trust the person handling your money. And you don’t want to dread your yearly meetings with your advisor.
What other tips do you have for vetting out a financial advisor? Do you have good stories to share? Or maybe horror stories? Share below!
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