Looking For A Financial Advisor

Looking For a Financial Advisor? Here's What You Should Know

Updated on May 03 2019


Finding someone to trust with your money and financial well-being is hard. Countless Americans rely on financial advisors to help plan for future but many of those American do not actually trust financial advisors to act in their best interests. In fact, a 2016 online poll by the American Association of Individual Investors (AAII) found that 65 percent of respondents mistrust the financial services industry and many Americans believe financial advisors work in the best interest of corporations, not their clients.

Working with a financial advisor you can trust is crucial to financial success. So, how do you know that you can trust your advisor? We’ve compiled important resources to arm you with the knowledge you need to find an advisor who has your best interest at heart.

5 Important Things to Know Before Hiring a Financial Advisor

1. Finding the right financial advisor for your needs.

Doing your research before hiring a financial advisor can really pay off in the end, giving you peace of mind knowing you made the right choice. Understand what kind of financial services you are looking for before hiring someone. Do you need help with retirement planning, investment management, financial planning in general, or all three? Conduct interviews with potential financial advisors and research their fee structure, reputation, and results. It may take more time now, but it will give you greater confidence and trust moving forward.

2. Consider the cost and fees of your financial advisor.

Before hiring a financial advisor ask direct questions about their fee structure and how they are paid. This can give you more insight into their practices and if they will be pushing certain types of investments based on commission instead of your best interests. Have a clear understanding of your payment responsibility. Is your financial advisor paid hourly, on commission, or will they charge based on a percentage of your assets? No matter how you will be billed, having that information in writing and up front before pursuing a relationship can help establish trust between you and your advisor.

3. Be sure your financial advisor is a fiduciary.

Fiduciary financial advisors are legally and ethically required to put your best interests ahead of their own. It is important that your financial advisor is a fiduciary because they will fewer conflicts of interests and garner trust from their clients. The Security and Exchange Commission directs that fiduciary duty also includes:

  • Acting with undivided loyalty and utmost faith.
  • Providing full and fair disclosure of all facts.
  • Disclosing and avoiding (when possible) all potential conflicts of interest.
  • Not misleading clients.
  • Not using a client’s assets for his or her own benefit, or the benefit of other clients.

4. Ask the right questions.

Hiring a financial advisor can feel overwhelming and it can be hard to know what questions to ask to make sure you are hiring the right one for your unique situation. Ask your financial advisor the following questions to establish a relationship of trust:

  • Are you a fiduciary?
  • What are your regulatory controls?
  • What is your experience and credentials?
  • How often do you communicate with clients?
  • How readily can I access my information?
  • How do you use technology to benefit your clients?
  • How do you make money?
  • How do you help clients with taxes?
  • Who is your ideal client?
  • What other services do you provide?
  • What is your succession plan?

5. Ask yourself if you can trust this person with your financial future.

Before hiring a financial advisor, consider their core values and how they align with yours. Think through how they communicate, their fee structure, their reputation, and have an honest conversation with yourself. Is this someone you want having access to your financial accounts? From monthly budgeting to long-term financial planning, a financial advisor can be a trusted partner helping you reach your financial goals.

Helping you access investment accounts, keeping you on track, and acting as an educated sounding board, financial advisors can be invaluable - when you choose one you can trust.

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