How to Pick a Financial Advisor

You are at the stage where you want to build some wealth, and you know that you should be doing more with your money, but you haven’t yet started. Maybe you are not yet taking full advantage of your company’s benefits, you pay too much in taxes at the end of the year, or you just don’t have a firm handle on your money.

Is it avoidance or procrastination? Or, fear of getting outside help? Just like we avoid going to doctors for our health concerns, we often avoid advisors. Only about 1-5% of us actually have an advisor- shocking! Maybe we’re afraid of judgment? Or maybe the thought of paying too much in fees?

You can choose to go solo and manage your own finances–or get some outside help. If you’re great with money and reading the fine print, do it yourself!

But, if you want to hire a planner, it can be stressful. Not as stressful as buying a used car, but stressful. As somebody who has hired multiple financial advisors over the years, here’s what I look for:

  1. Decide if you want to use a big investment firm, or a smaller firm. Both have advantages.
  2. Use the SEC/FINRA search tool to find somebody in your state (or region) that is registered for providing financial and investment advice:
  3. Check their designations and degrees. There are tons of certifications in this area, and most are meaningless. Look for CFP, CPA, ChFC, or CFA behind their names. An MBA or degree in tax or accounting would also be good to have.
  4. See if they are flexible to work around you. Will they see you virtually? Will you need to come in person?
  5. Check on the fee structure. Ask for the ADV Brochure (if they don’t offer it). This will tell you what they do, and what they charge. Ask for any special discounts they might offer from this rate. Many charge a % for something called assets under management- basically, their fee will be based on your portfolio size. Others will charge by the hour.
  6. Call and confirm that: they are “fee only” (not fee-based or commission-based); this means they only work on hourly or monthly fees. Also ask is they are a “fiduciary” – some are not, and that means their interest is more aligned with the firm than yours.
  7. Narrow down the list to 1 or 2; then maybe ask for a proposal of what they would offer and charge you specifically.

That’s it – it’s not too complicated! Once you sign up, you should expect to have 2-3 meetings with them to provide your historical data (salary, taxes, expenses, goals, risk profile) – this is all really helpful to make sure the financial plan meets your expectations. Good luck!

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