Maybe you know you would benefit from working with a financial advisor but don’t know how to choose one.
Here are a few of my recommendations in trying to find a financial advisor:
1) Look for someone who has their CFP® or CERTIFIED FINANICAL PLANNER™ designation. These letters mean that they had to take six classes and pass a comprehensive exam and submit a financial planning case. It is a tough exam. Passing the test shows a level of knowledge and commitment to the industry. The CFP® board also requires that CFP®s promise to act ethically and to a fiduciary standard. (I could write a whole article on the fiduciary standard but it basically means the CFP® will recommend and choose what is in the client’s best interest.) A CFP® also must do 60 hours of continuing education every two years to keep their designation.
Are there good advisors out there without the CFP®? Yes there are, but I am telling you what I would look for in an advisor.
2) I recommend looking for Fee-Only Financial Advisors. Once again this is not mandatory. Fee-only means that the advisor is only paid by their clients and not from outside sources. So a Fee-Only advisor does not receive sales commissions for insurance or investment products such as an annuity. I like the simplicity and transparency of fee-only. You know that the advisor is not recommending something to you because they will earn more money by selling you that product. It helps eliminate any conflict of interest.
No matter who you work with, your advisor should be able to clearly explain to you how they are paid. They must be getting paid somehow. Ask for specifics on how they earn their money.
3) Interview and talk to a few financial advisors. I highly recommend doing this. Yes, it may seem like a bit of a hassle and possibly a waste of time but it will provide you with more information for comparison. You want to sincerely like, trust and feel comfortable with whoever you choose to work with. You want this to be a long term relationship. You want to be able to ask any questions. You should not be talked down to. You should want to meet with them and connect with them on an emotional level.
4) Make sure the advisor does comprehensive financial planning – which means that they look at cash flow, income taxes, risk management (insurance), estate planning, retirement analysis, and investments. I would not recommend that you work with someone that only does and cares about investments. Investments are only a part of the whole picture. A good planner will look at all these areas and want to know about what is important to YOU – your dreams, goals and values.
Here is a good list of questions to ask when you meet with potential financial advisors.
http://www.letsmakeaplan.org/other-resources/selecting-an-advisor
I would always trust your gut. If something sounds too good to be true (Madoff) or you don’t have a good feeling about working with someone – don’t! Keep looking until you find the right fit. There are plenty of good financial advisors out there. There are also lots of not so good ones too. Find the one that is right for you. They can help get you on the right path and give you a sense of comfort and security that is worth every penny.
If you have any questions about choosing a financial advisor or would like to hear about how I work with my clients, please give me a call or send me an email.
Wishing you only the best,
Tara
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