Find a Financial Advisor
Realize first that the term “financial advisor” is a generic term much like “retirement advisor“and can mean almost anything. In fact, most “financial advisors” make commissions by selling products. Which means that while they may be sincerely interested in helping you, they earn nothing until you buy something. So if you want advice and not products, that you want to engage a financial advisor and pay for their time and find a financial advisor just as you would an attorney or a CPA.
The first thing you would do to find any financial professional is to ask people you know and trust. Ask your CPA, attorney your banker. Be careful–are they giving you the name of a sales person or advisor? If you want advice, then you want a fee-only financial advisor. Some fee-only financial advisors are members of NAPFA.org and you can get local referrals from them. You can also get a referral from the local Financial Planning Association. These referrals would be the same as using a lawyer referral service. There is no guarantee of quality using such a referral service and while an option, may not be the ideal way to find a financial advisor. but if you get several such referrals. you can compare.
Next, check them out on their web site. Does their philosophy and tenor strike a cord with you? No web site? Then pass. Any financial advisor without a web site is not worth considering as a professional.
After talking with people you trust, getting referrals, checking out the web sites of advisor referred, you will hopefully have a couple candidates that look like a fit. Now, check their background–a critical step to find a financial advisor.
Ther first check is at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm. At this site you can check their status with FINRA, the organization that licenses them to earn commissions (if they are so licensed) or their status as a registered investment adviser (a required certificate if they charge fees).
They likely also have an insurance license so locate the State Department of Insurance web site and you will find a way to check agent licenses there.
Additionally, the financial advisor may have credentials such as certified financial planner(tm), registered financial consultant, certified retirement planner, etc. If they have credentials, you will be able to check the status of their credentials with each of the organizations that has granted the credentials as follows:
CFP(r) http://www.cfp.net/search/
CPA — a state by state check — look on the web for your state Board of Accountancy
ChFC - There is no complaint or disciplinary process for either the ChFC or CLU designation so there is no way to check on these folks (YIKES!)
Interview your advisor and ask the following questions:
What’s your investment philosophy?
What percentage of your clients are people like me?
How do you charge?
What is your communication model–how frequently and how do we communicate?
What are your specialties?
In addition to your specialities, can you help me with (fill in issues of concern to you)
Because the relationship with a financial advisor is important, completing the above steps to find a financial advisor, while cumbersome, is worth it. And if you do it well, you only need to do it once.
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Tags: find a financial advisor
November 26th, 2008 at 7:28 am
Yes, for many people, getting a referral from a friend or other professional will work. However, even the recommended financial advisor from the most trusted person you know isn’t going to be a good fit for everyone. I run a company that matches individuals to unique financial advisors - http://www.claroconnect.com - and our screening tool allows people to search for custom keywords like “socially responsible investing”, “special needs trust for disabled child”, etc. We even have advisors who specialize in airline employees, divorced women, or small business owners. The key is to keep looking until you find someone who has experience working with other people in your exact financial situation.
December 16th, 2008 at 10:41 pm
I have a good friend who’s a financial advisor. She left her previous company because it was too sales-oriented. They didn’t really care about their clients - they were encouraged to ‘fit’ their financial planning around their products, rather than the other way around. I think that’s having very poor integrity.
Now, my friend is much happier at a fee-based financial advisory firm, and I’m glad for her. Your post was really useful, so thanks for it.
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December 21st, 2008 at 2:07 pm
Great tips. I like to ask what they invest in personally, what their strategy is, and how they get paid. There’s a big difference if they get paid on how well your portfolio performs vs. a commission off the investments they sell you.
December 31st, 2008 at 1:50 am
Perhaps the best tactic is really to be your OWN financial advisor. With the current state of the economy, do you really trust other people to invest your money? No one really knows the nature of the game right now. It’s all changing too fast. Be very careful about making investments. The most important, and simple, piece of financial advice you could ever get is to minimize your expenses, pay off any debts, and create some passive income.
Jonathan Brownes last blog post..Top 10 ways to survive in 2009