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 specialties, 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.
Financial advisors who seek to gain clients ProspectMatch
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 – – 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.
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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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.
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
Great post. Getting advice from a certified professional is the best way to go when it comes to getting ones finances in order. If everyone did so before they went for those bad mortgages people wouldn’t be loosing their homes left right and centre. Think about it…when you need a medical check-up will you trust some random guy or will you go to a doctor?
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in many cities there are government sponsored programs right now, for free or low cost financial advice.
People should really be shopping around as far as financial advisers go just like they would with any other major decision. The first sentence here was an impact one. Generic term is right. Make sure the person you choose is the best for you, and they aren’t all the same. THis is a great article. Keep up the good work.
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I’d highly recommend Dave Ramsey’s material for financial advice.
Kevin in Manilas last blog post..Perks of Working at Home
Interesting article. And yes, financial advisory is a must to every citizen at a time of crisis as this. not to mention the economy still haven’t recovered well. So financial aspects need to be balanced well in tandem with the economic goth of the country to allow people to get back on their feet.
Excellent information provided in your post. Unfortunately as a CPA I can state without question that the people that require financial advice are also in a financial position were they are not able to afford it. To bad there has not been some happy medium created that could solve both issues.
Relying on friends or family for sugegstions may be ok to get the process started but didn’t a guy named Madoff come highly recommended? Point is to check them out, ask alot of questions and use common sense.
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Great point about Madoff – but then, how could anyone have known that he was taking everyone for a ride? I’m sure ‘checking him out’ before the whole storm blew up, he would have looked like a sure bet…
Stay from individuals like Madoff.. Yes, its really better if the person you are going to deal with is someone recommended by a relative or a friend since they would never have the intention to defraud your.. However, still spend time to do a background check also.. There’s nothing wrong with that since you are just being careful..
Financial advise is a must nowadays. Especially with the economy being unstable. It really would be helpful if someone could guide people in the correct path with regard to finance.
I agree, I prefer an individual and for my situation optimized adviced. Then I’ve no problem to pay f or it. On the other hand, if I get an advice for free, how could I assure that it’s best for me and not the temporary best comissions….
There are all types of advisors. Some help you make money, some help you keep it, some help you transfer it to your children, some help themselves to your money. Be very careful in selecting your advisors, especially if they are going to get fees from you. Best thing to to is research yourself first before you talk to anyone.
I think registered financial adviser makes sense. If they charge for time not try to sell something to make commission they should give you the best advice they can. They have no insentive to try and sell you something if they do not get paid to.
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Good Advice, however my financial advisor i did not have to go through your association, i guess a lucky. but what i did was to research the company she represent and to see if she is bonfide agent of that company. And she was, so i was not afraid of doing business with them. And last year they paid me dividend for my investment.
Thanks some very good information. Right now people need to make sure the person they use for financial advisor is registered and really is a financial advisor. I like the idea of fee based so you only pay when you use thier service.
I think the government’s spending priorities are misplaced, . Spending should focus on constructing bridges, repairing highways, and implementing transportation systems that reduce the nation’s dependency on foreign oil. Instead, the bulk of government dollars has gone to purchase private corporations and bail out bank fraudsters!
Hello. Thank you very much for sharing these very useful tips and steps on finding a financial advisor. I would really like to learn more about finance.
One has to be so careful when looking for a financial adviser, and these are some really great tips and advice so I thank you for sharing them in this post.
the cost of a financial advisor is almost always offset by the savings, or earnings generated through sound fiscal advice.
Hi,
You are right, first to look financial professional as advisors and make sure that every one having trust on these advisors. Your advisor should associate with some kind of associations; this link will build trust among clients.
I like your post.
It just seems that there is never any independent advise given, the advisor always tries to push you towards a certain deal that they make more commission on so it makes trusting financial advisor’s difficult.
Great advice on finding a financial advisor vs just someone selling financial products. Very important to know the difference, to find someone who knows the products and which are best for client situations. I am a CPA in Newport and have a few good ones to recommend.
Is there really such a thing as a free financial advisor, or an independent one for that matter? Especially when one deal will undoubtedly create more commission than another.
You’re right about what these people sometimes do. I remember taking my aunt to a financial advisor when she wanted to invest some money and we ended up meeting up with a rather aggressive man who was nothing more than a glorified salesman. He didn’t give us advice, he just wanted to make some money.