7 Ways To Know You’ve Found the Right Financial Advisor for You
If you’re in the market for a financial advisor, choosing one can be an intimidating prospect. After all, how will you know when you’ve found the right match? The answer comes when you’ve properly vetted them. Taking actions like researching their background and qualifications and asking the right questions will lead you in the right direction.
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Here’s the expert advice you need to hire the perfect financial advisor for you.
You’re Aware of Their Qualifications
James Enriquez, CFP, a managing partner and financial advisor with Strategic Insights Financial Planning Group, said that while surprising, the barrier to entry is relatively low.
“There are no career specific college education requirements,” he said. “In fact, not all financial advisors have the same licenses. For example, some life insurance agents who are only insurance-licensed might call themselves a ‘retirement income planner.’ Lastly, not all designations are created equally. Some only require a fee, while others have an education component, exam and experience requirements. Potential investors should ask about the advisor’s qualifications.”
You’ve Researched Their Background
“People can go to FINRA BrokerCheck to check the advisor’s history,” said Enriquez. “If an advisor has a designation, clients can go to the awarding organization’s website to see if the advisor has any disciplinary history. Potential clients should interview advisors and ask questions. Asking friends and families for referrals can help vet a financial advisor, too.”
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They Match With Your Financial Goals
Diane Bourdo, CFP, president of The Humphreys Group, a women-owned and operated wealth management firm, said you need to consider your goals when looking for the right advisor.
“Assess your personal and financial goals, your assets and your liabilities,” she said. “Why do you want to work with a financial advisor and what do you hope to gain from it? Are you looking for help investing? Are you trying to set up an educational fund or a trust for future generations? Do you need help planning for retirement? Different financial advisors specialize in different areas. It’s important to figure out precisely what you require a financial advisor for in order to sort out which advisors may be a better fit than others.”
You Like Their Communication Style
Stephen Roth, CFP, principal and founder of Limestone Financial Group said that good communication is the key to any good relationship — including the one you have with your financial advisor. He suggested that you should evaluate whether they can effectively communicate with you by asking yourself the following questions:
Do they speak my language?
Is it engageful communication?
Do I understand and feel emotionally safe to express myself or challenge a recommendation?
Am I being heard?
You Know They Will Personally Be Managing Your Money
“This is an often overlooked one, and I am seldom asked this question,” Enriquez said. “Along those lines, clients should ask their advisor who is managing their money. Third-party money manager adoption is increasing, and clients might be surprised that their advisor is not the one actually managing their money.”
You Are Comfortable With How They Get Paid
Enriquez said you need to consider the following questions:
How does the advisor get paid?
If the advisor is only paid by commission, how is objectivity ensured?
Does an advisor only charge an asset under management fee?
If so, will the advisor be able to recommend paying off their mortgage early, for example, even though they’ll be reducing their income?
Does the advisor offer financial planning for a fee?
Will they charge you a flat fee without having any assets to manage?
If you’re an early career investor and you choose an advisor who doesn’t offer financial planning for a fee, you could get left behind, Enriquez said.
“Since they might not have a lot of assets to manage due to the majority of their assets being tied up in their 401(k), they might not be able to get comprehensive financial planning if their advisor cannot collect a fee,” he explained.
You Know Their Plans for Remaining in the Industry
Jason Dall’Acqua, CFP, financial advisor and founder of Crest Wealth Advisors, said it’s important to know how long the advisor plans to remain in the industry.
“If you are looking for a long-term, ongoing relationship, then you want your advisor to be able to guide you over the years,” he said. “The average age of a financial advisor is 55, meaning they may be starting to think about their own retirement. Know what the advisor’s long-term plans are and what may happen if they do transition out of the industry.”
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This article originally appeared on GOBankingRates.com: 7 Ways To Know You’ve Found the Right Financial Advisor for You
