When it comes to your finances, you want to make sure that you are making the best decisions for your future. That's why it's important to find a financial advisor who can help you navigate these waters and make sound financial decisions. But how do you find a good one? We can help you find the right financial professional to make planning for your financial future as easy as possible.
Here's what we'll cover:
Considering which life stage you’re at can narrow down your search for an advisor.
Since every financial advisor could potentially offer different types of advice, it’s important to match your needs with the right advisor. You may need help establishing college funds for your kids or are looking at a nice retirement plan, or perhaps you’d like a comprehensive financial plan to get you on the right track. Regardless of where you’re at, assessing your needs in your current life stage can help inform your decision of a financial advisor.
Once you’ve decided where you need help with your financial planning, narrow down the field with an advisor catered to your needs. Financial advisors offer specialties in their areas of expertise in order to help you meet your financial goals. For example, you might need help with budgeting over retirement planning, so find a financial advisor with expertise in your area of need.
Here are some examples of services offered by financial advisors:
You also might need to know the difference between financial advisors bound by fiduciary duty and those not bound. Fiduciary duty means that they are legally required to work in your best financial interests. If you want to get the most out of your advisors, it may be prudent to verify their fiduciary status. Though technically anyone can offer financial advice, getting it from a highly knowledgeable source is key to your financial success.
Before you hire any financial advisor, look them up on an official database to find out more about their licenses and background. One option is to go to https://brokercheck.finra.org.This will give you all the basic information you need to start your research on the advisor or advisors you are interviewing. You’ll learn about the advisor’s investment licenses, their work history, complaints or judgements against them, and the states in which they are licensed to do business.
You should also gain an understanding of what licenses a financial advisor has, what those licenses mean, and the work your advisor can do with the licenses they have. Review the advisor’s credentials and use the following information to help you understand what you find out about them.
The advisor you choose needs to be a good fit for you; you’ll want a relationship that makes you feel comfortable and a plan that gives you confidence for the road ahead. So, it’s important to do your homework before you even have a “get to know us” appointment with a potential advisor. A good place to start is a simple Google search to check out the advisor and their firm. Check out their website and read a little about them before you meet with them. See if you can find an explanation of their values and philosophy as a company, and consider whether or not you agree with what you read. Between your research and that initial meeting, you’re trying to determine the answer to the question, “Are we a good fit?”
Pro-Tip: Write down a list of questions to ask the advisor in your initial meeting.
For instance you might ask them, “What is your definition of a ‘good’ retirement plan?” All advisors have certain procedures they like to follow to accomplish a given goal, so you should listen and ask yourself whether or not you like what you’re hearing and whether or not you actually understand what they are saying. You need to learn, and if the advisor is talking in terms that seem like a foreign language to you, this could be a sign you’re not a good fit. This will be a long-term relationship that will require trust and a common understanding of each other’s value of money, and you will need to be able to communicate easily with each other.
Knowing the philosophy your advisor embraces will give both of you a basis to either agree or disagree. Just because you disagree does not mean you can’t work together, but it gives you an opportunity to direct the advisor on your own philosophy. Communication is key; make sure you and the advisor are hearing and understanding each other.
Ask to see a sample plan and have the advisor talk through the various aspects of the plan and demonstrate how to read it. A good place to start is looking at the plan’s retirement timeline showing how your money might grow and how long it is projected to last. Ask yourself some key questions as you go along.
It all needs to make sense, and you need to know the answer to these questions. That age-old saying applies here: If it sounds too good to be true, it probably is! These questions will help you weed out advisors who might over-promise and under-deliver. When the plan is delivered, you must be able to feel confident in understanding how it will work. You should know and understand it well enough to go home and teach it to someone else!
Tracking your plan is equally important as designing it, so be sure to find out what their practices are for tracking and maintaining your plan and keeping you informed. At the very least, you should meet yearly with your advisor for a refresh of your financial data and to talk over any changes in your goals and circumstances.
Beyond designing and tracking your plan, you’ll also want an advisor who will communicate with you on a consistent basis, especially when changes are warranted. Make sure your advisor will communicate with you throughout the year with newsletters, market commentary, and regarding regulatory changes that may affect your plan. It is also vital for you to have access to a portal where you can see all your investments in one place so you can track performance and changes. Make sure your advisor is someone you feel comfortable with, so you can pick up the phone and call and/or make an appointment whenever you have a question or concern, rather than just waiting to hear from them.
Before you set up the fact-finding appointment with your potential advisor, learn what it will cost to work with them and how they determine that cost. Financial advisors can be fee-only, fee-based on assets under management, or commissioned. Sometimes advisor fees will involve a combination of all these compensations. In addition to the advisor’s compensation, each investment or insurance product will have a cost associated with it. Full disclosure between your advisor and you is a must, and you must ask yourself if you see value in what you’ll be paying for.
Now that you’ve evaluated your options and have a good understanding of what you’re looking for in a financial advisor, it’s time to make a decision. You can either go with the adviser you initially met with or take your search further. There are a lot of resources available to help you find the right advisor, like the fiduciary advisor registry or the National Association of Personal Financial Advisors.
Whatever you decide, finding the right financial advisor can feel as if a weight has been lifted off your chest. Financial advisors aim to alleviate stress and put you on a path to financial success. Their goal is for there to be a relationship that makes you feel comfortable and a plan that gives you confidence down the road.
If you'd like more help figuring out whether hiring a financial advisor is right for you, read more about fiduciary financial advisors,here.