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7 Tips to Help Find the Financial Advisor of Your DREAMS!

6 min read
7 Tips to Help Find the Financial Advisor of Your DREAMS!

Hiring someone to work for you is almost never an easy task, especially when it comes to your money, insurance and other personal finances. It goes without saying that there are many people out there that only care about making money, making it very important for you to always be cautious with whom you work with. You always must make sure that the people you are hiring are on your side and want to do a responsible, high quality job while always putting your best interests above all else. I could write this and illustrate all of the fantastic traits I believe a Financial Advisor should possess, but the truth is everyone is looking for something different and I am not going to pretend I know exactly what you want. I would rather provide you a guide with 7 tips that I strongly believe can help you in preparation for hiring a Financial Advisor.

What is great about this approach is that it works if you are hiring someone for the first time, or looking to make a change to someone who better suits your personality, goals and objectives. When you purchase a new car, you usually have an idea of what is important to you such as fuel efficiency, color, size and price. Well the same should hold true with your search for a Financial Advisor. These tips are going to help you find what is important to you, thus narrowing down the possibilities and making your search more efficient. Efficiency is going to help you move forward towards your goals, no matter what they are. Please review the tips I have outlined below, as I believe you will find them helpful:

1. Prepare yourself!
Take the time to really know what you are looking for. Write down your goals and objectives in advance, along with your reasons for seeking a Financial Advisor rather than waiting for him or her to ask. Also, remember to have a list of questions ready for your advisor interviews. Experience has showed me that most people forget their questions until after the initial meeting, postponing the search process, decision process and the beginning of working towards accomplishing your goals.

2. Do not confuse a salesperson with a Financial Advisor.
A salesperson is one who will “sell” you something and most likely make a large commission from doing so. In many instances they are directly employed by large investment or insurance companies and are hired with the sole intention to “sell” that particular company’s product alone. In addition, they may even have minimum “sales” goals they must meet, prompting them to have that goal in their mind effecting the suggestions presented to you. You should be looking for an advisor whose only intention is to lay out a plan that can potentially help accomplish the goals you have discussed with him or her, whether it is retiring to a beach house watching the sunset over the ocean or having a stockpile of cash available for the inevitable day your child steps out the front door to college. He or she should also have the ability to utilize any investment or insurance option that is appropriate for you and your objectives, not what they are supposed to “sell” to you or what they are “allowed” to provide to you that will enable them to meet any imposed “sales” goals they are working with.

3. Know what fee structure you are comfortable with.
There are many ways financial advisors can be compensated and it is important to know which you are comfortable with. The two primary methods are commissions or fees. Some advisors receive a commission every time he or she buys or sells something for you, getting paid regardless of performance. This can become quite expensive if your advisor is not completely working with your best interest at heart, but rather trying to generate income for their firms. Other advisors receive an annual fee based on how much money you allow them to handle for you. This is typically more fiscally friendly, but make sure you agree on the terms in advance because an some advisors do charge excessive fees. In this case, there is incentive for them to try and make your portfolio grow. For example, an advisor charging 1% per year, which is very reasonable, on a $75,000 IRA would earn $750 and if over time this advisor helps your portfolio grow to $100,000, he or she would now be earning $1,000 per year, or 1% of $100,000. The incentive is always there to put your best interests first, as declining values for you mean declining fees to them and I do not know of any mortgage company that will take a smaller mortgage payment from your advisor because your balance may decline.

4. Decide how local your advisor should be?
Your financial advisor does not have to live in your town, or even your state for that matter. With today’s advancement in technology, it is easy to work with an advisor who is 10 miles away or 1,000 miles away and not realize the difference. Cell phones, email, teleconferences, internet meetings and internet cameras are just a few of the pieces of technology which allow for that feeling of personal contact at any time and from any location. I suggest you determine your comfort level and establish a distance you are comfortable with prior to your search.

5. Do not solely rely on the advice of friends and family.
It is always great to hear an advisor has treated your loved ones in a professional, responsible and caring manner, but do not use this as your sole decision making point. Everyone has a different financial situation and a different personality, so an advisor who excels with your parents, may not work as well with you. Take the time to ask your friend or family member questions about the advisor prior to meeting him or her in order to determine if the fit is right for you, your family and your goals. For example, some advisors may take an ultra conservative approach to investing which works well for your parents, but you may be seeking an advisor who specializes in aggressive alternative investments.

6. Research first.
Keep the following website readily available: www.FINRA.org. After deciding on a few advisors to interview, visit www.FINRA.org and look for the FINRA BrokerCheck hyperlink which usually shows up on the right side of the website under “Most Viewed”. This will allow you to do a search for the advisors and see if there are any formal complaints and/or past disciplinary actions against him or her. This step could help you to eliminate wasted time and help you know that the person you are considering has not had any behavioral and/or legal problems. Remember, there are many non-trustworthy people in all businesses, do you really want to have one work with your finances?

7. Decide on your investment philosophy and risk tolerance.
Prior to speaking with a potential Financial Advisor, determine how you and your family feel about investing. Are you comfortable with major volatility or do you prefer minimal to no fluctuation? For example, how will you feel if your IRA was worth $200,000 last month and you experience a temporary decline to $180,000 this month? Would a situation like this cause you major emotional distress or do you feel this is normal market fluctuation? If you do not have an opinion beforehand, many advisors may try to “sell” their philosophies to you. A simple way to convey your feelings to an advisor is on a sliding scale of 1-10, with 10 being aggressive and 1 being extremely conservative.

Although there are many other tips I can offer, I feel the seven illustrated above are among the most important to consider prior to interviewing advisors. Choosing the right Financial Advisor is an important process and should not be taken for granted. We all have our own goals to accomplish in life and the right Financial Advisor can play a critical role in your pursuit of happiness and financial security. Whether you are looking to retire to that beach house watching the sunset over the ocean or traveling a path to live a stress and debt free life, working as a team with a qualified Financial Advisor has the potential to help accomplish this. I hope these tips help you meet your goals and wish you a prosperous life!

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