Picking A Financial Advisor

There are all sorts of people who want to give you financial advice.  The representatives from investment companies, people on the television, and even well-meaning relatives.  Heck, even I want to give you financial advice.  However, many of these people may not know what they are talking about, or they may not have your best interest at the front of their minds.  So, how do you know if you are picking the right person to help you?

Think About Your Needs

There is a huge variety of levels of financial advising.  From basic classes on balancing a checkbook to sophisticated investment portfolios, your needs are the most important part.  In my opinion, a good advisor is an educator.  What level of information do you need?  Don’t rely on a financial advisor to work out your place on the financial education scale.  Depending on their background, experience, and compensation model, a financial advisor might think that they are the right person to help you even if they are not.

Consider the compensation plan of a prospective advisor.  Many people recommend a fee-only financial planner, to eliminate potential conflicts of interest.  However, if you are looking for a variety of investment products, a broker-dealer might be a better choice for you.

Ask Around and Do Your Homework

Personal recommendations are the best way to find a reputable advisor.  Be sure that the recommenders understand your position:  rich uncle Bernie’s advisor is probably not the right person for a young family.  You can also check with the Financial Planner Association or the National Association of Personal Financial Advisors to find more candidates in your area.

Once you’ve got a few names, check them out online.  Look at their company websites, Facebook pages, and LinkedIn profiles.  You can verify Certified Financial Planner credentials at the CFP board website, and you can check to see if the practitioner has ever been subject to disciplinary action at the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck.

Do Some Interviewing

Pick two or three or four potential advisors, and set an appointment.  It doesn’t have to be in person, it can be over the phone or online.  Ask questions, including:

  • What sort of credentials do you have?  Why did you pick that one?  How does that make you the right person to advise me?
  • How are you compensated?
  • Do you have a speciality or particular type of client with whom you work frequently?  Does your firm provide other services, such as accounting or tax planning?
  • Will I work with you directly, or with your team?  How often to you anticipate that we will meet or talk?
  • What would you do for me?  Can I see a sample of a plan?

Consider The Answers You Get

Not only do you need to see if you feel comfortable with the advisor, and whether their practice seems right for your needs, you also need to look out for concerning statements.  This post at Wisebread does a fabulous job of explaining the types of things you never want to hear from a financial advisor.

Just Do It

At some point, you just have to pick an advisor and get started.  In the financial world, time is money.  Starting sooner is always better than starting later.  Every year or two, consider whether your financial advisor is still working well for you.

Once you have a framework for choosing a financial advisor, the selection process should be a lot less daunting.  So, let’s go…


About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • joseph kaba

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