Choosing a Financial Advisor
Wednesday, July 31st, 2024
Presented by Sean P. Reilly, CFP®, CPWA®, CIMA®, CEPA®, Managing Director
When choosing a financial advisor, it’s important to make a decision that aligns with your financial goals and values. Here’s a guide on some things to look for:
Qualifications and Credentials
Make sure your advisor holds certifications such as Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), or Personal Financial Specialist (PFS), demonstrating their expertise and commitment to professional standards.
Experience
Evaluate how long the advisor has been practicing and whether they have successfully navigated situations like yours. Experience brings insights and confidence in handling complex financial matters.
Know What You Are Paying
Understand how fees are structured—whether it’s a flat rate, commission-based, or a combination. Transparency in fee arrangements is crucial to maintaining trust and ensuring alignment with your financial preferences. There should be no hidden costs associated with managing your account and you should have no questions about how much you are paying.
Is Your Advisor Acting in Your Best Interest?
Confirm that your advisor acts as a fiduciary, bound by law to prioritize your interests ahead of their own. A fiduciary ensures your advisor is focused on advancing your financial well-being – not their own!
Communication Style
Effective communication is key. Your advisor should communicate clearly, avoiding industry jargon, and take the time to educate you on financial concepts and strategies. If you are a couple, make sure the advisor is speaking to both of you and not just directing comments towards one person.
What’s the Plan?
Ask about the advisor’s approach to financial planning. A financial plan lays out a road map to illustrate how you can achieve your goals. If you are considering hiring an advisor, make sure that person can provide planning advice on topics from retirement planning and taxes to estate planning and long-term care needs analysis. Your situation is unique. The person you choose to work with should create a plan that reflects that.
Where is Your Money?
Knowing where your assets are held is important. A reputable custodian provides security, transparency, and regulatory compliance. The track records of third-party custodians like Fidelity, TD Ameritrade and Charles Schwab can bring peace of mind to investors who value safety above all other concerns.
Tools and Resources
Proficiency with financial tools like a financial calculator demonstrates a commitment to thorough analysis and strategic planning, enhancing the quality of advice provided. Make sure your advisor knows how to use financial software and industry tools.
Transparency
Your advisor should disclose any potential conflicts of interest and be transparent about affiliations or incentives related to recommended financial products or services. Transparency builds trust. You should have 100% trust in the person you choose to help you.
Personal Chemistry
Trust your instincts when assessing personal compatibility with your advisor. Your relationship with your advisor is likely to be a long one. Working with someone you like can lead to more effective collaboration.
Regulatory Record
You can check out the advisor’s regulatory record through resources like FINRA’s BrokerCheck or SEC’s Investment Adviser Public Disclosure (IAPD) database. This will reveal any disciplinary actions or complaints against the advisor.
Accessibility and Availability
Consider how accessible the advisor is and whether they are available to address your concerns promptly. If your advisor is difficult to get a hold of when markets are shaky it could be a red flag.
Specialized Knowledge
Depending on your specific situation, try to find an advisor with specialized knowledge, such as estate planning, tax planning, or business succession planning. Assess whether the advisor has the expertise to handle your specific needs.
By carefully considering these factors, you can find a financial advisor that not only has the necessary expertise but also shares your values and is dedicated to guiding you towards financial success. It’s your money…you earned it. Make sure the person you choose to help you steward your capital is the best partner you can find!
