Best Financial Advisor

How to Find the Best Financial Advisor

Updated on Jul 02 2018


If you are thinking about hiring a financial advisor, it’s important to do your research and take the time to find the right person or firm for your unique situation. The process may take a little more time than simply doing a quick Internet search, but the investment of time will be well worth it in terms of your peace of mind knowing you made the right hire.

You will most likely be working with the financial advisor or planner for many years and they will help shape your financial success. Here are six steps to help you find the best financial advisor for you.

1. Understand the Different Financial Service Offerings

Retirement planning and financial advisement is not a one-size-fits-all deal. People have different financial situations, backgrounds and goals and need to search for a financial advisor with their custom needs in mind. For example, some advisors offer financial planning services but not investment and portfolio management, while others manage investments and don’t focus on financial and retirement planning. Also, advisors focus on different strategies and demographics:

  • Retirement planning focuses on the asset distribution phase for clients
  • Younger demographic financial strategizing focuses on the accumulation phase for clients

Consider what type of financial advice you need and know which services a potential advisor provides. Here’s a summary of the three main types:

  • Financial planning focuses on all aspects of your financial life such as how much to save, and what type of insurance you need. Investments are not the sole focus.
  • Investment advisory services are focused on the investment management functions such as what investments to own in which accounts. Investments are part of an ongoing financial planning process and investment portfolio.
  • Retirement income planning is focused on how you coordinate all the pieces such as Social Security, taxes, investments, pensions, retirement date, and so on, so they all align toward the goal of delivering a retirement paycheck for your life.

2. Make Sure the Financial Advisor Has Reputable Credentials

Credentials are tricky. Some organizations offer easy-to-get credentials for a fee and sometimes a small course so that salespeople can pay the fee to get the “credential” and appear to be an expert. You want to find someone with reputable credentials to manage your finances, not someone who has a title with little to no experience or proper financial designation.

To find financial advisors or planners with reputable credentials, look for someone with some of the following qualifications:

  • Certified public accountant (CPA)
  • Certified financial planner (CFP)
  • Chartered financial analyst (CFA)
  • Personal financial Specialist (PFS)
  • Certified fund specialist (CFS)
  • Chartered financial consultant (ChFC)
  • Chartered financial analyst (CFA)
  • Chartered life underwriter (CLU)
  • Juris doctor (JD)
  • Series 7, 24, 51, 63, 65 and 66 licenses

If you’re near retirement, find someone with specialized training in retirement planning, like a Retirement Management Analyst (RMA) or a Retirement Income Certified Professional (RICP). Keep in mind that credentials are obtained by passing an examination that measures proficiency on the subject matter. To maintain the designation, an advisor must adhere to an ethics policy and meet continuing education requirements.

3. Understand the Compensation

To hire the right financial advisor for you, you’ll need to know all the ways a potential financial advisor may be compensated and decide which compensation method works best for you. Here are a few ways financial advisors and planners are compensated:

  • Charge an asset based fee
  • Charge an hourly fee
  • Participate in commissions
  • Charge an hourly rate

You’ll also want to understand the difference between:

  • Fee-only advisors – Can’t accept commissions
  • Non-fee-only advisors – May be able to receive other types of kick-backs or incentives from their company based on meeting sales goals or objectives

The compensation method that works best for you depends on your unique situation. For example, if you are buying an investment that you plan on holding for a long time – and will not need ongoing advice – paying a commission may be the most cost-effective method. However, if you have the desire to have someone readily available to update your financial plan and address ongoing questions, a fee structure might be optimal. The key is that you understand what you’ll be charged for the services you’ll be receiving from the financial advisor.

4. Interview the Potential Financial Advisor Candidates

You need to ask important questions before you hire someone to manage your finances. The right questions can help you weed out financial advisors whom you don’t communicate well with, or who don’t typically work with clients like you.

Read our article Top Questions to Ask a Financial Advisor to learn what types of questions can help you secure the ideal financial planner or advisor for your situation.

5. Verify Credentials and Check for Complaints

You can find out a lot about a financial advisor by simply doing an internet search. Find out whether the advisor has any testimonials or complaints by doing a little research online.

Also, simply ask the advisor these questions as transparency is important when it comes to a relationship with someone who will be handling your money:

  • Have you ever been convicted of a crime?
  • Has any regulatory body or investment-industry group ever put you under investigation, even if you weren’t found guilty or responsible?

To be sure someone is legitimate and has a good service record before you hire them you can verify a potential financial advisor’s credentials and complaint history by checking their records at FINRA, the SEC, the CFP® Board, or with other membership organizations the advisor is associated with through their business. Formal customer complaints stay on a financial advisor’s record for a long time so it’s usually easy for people who do a little digging to locate any potential issues.

If an advisor has passed all of the screening this far, ask for references of current clients whose goals and finances match yours and then contact those references for more particulars.

6. Educate Yourself on Fraud.

It’s important you know how to spot fraud. Identity theft and fraud are a lot more prevalent in the digital age so it’s crucial you no whether a potential financial advisor has had fraud issues. To avoid having custody of client funds most reputable financial advisors will use what is called a “third-party custodian” to hold your assets. This means your accounts will be opened at a large, well-known firm, such as Charles Schwab or Fidelity. While the advisor will be able to place trades and offer service on the account, only the custodian will report transactions to you, verifies signatures, and so on. This protects both parties.

Be cautious of advisors or firms who:

  • have custody of your money
  • own the related firm that serves as the custodian
  • recommend investments they co-own with other firms

The ownership structure and any related entities should be listed in the firm’s disclosure document called an ADV Part Two.

Find a Financial Advisor Who Gives You Peace of Mind

Savvy financial planning and taking measures to prevent financial mistakes will help you develop a financial portfolio you will be not only be proud of, but will also greatly influence your quality of life and financial success. Connect with a pre-screened and qualified financial advisor today.


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