How to Find a Good Financial Advisor

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By poe9368
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Find a Good Financial Advisor

Finding a good financial advisor can be somewhat intimidating and depends on your personal situation. Many advisors specialize in certain areas such as Estate Planning, Retirement Planning, Investment Portfolio Management, etc. When you determine what you're looking for, you can then focus on an advisor who specializes in that area.
Follow these basic steps to make the process easier.

Difficulty: Moderate

Instructions

Things You'll Need:

Computer
Internet access

Step 1

Listen and learn from others. First and foremost is a referral from a trusted source such as a friend or family member who has similar needs as you and has had a positive experience with the advisor they're recommending. You can also Google search advisors and interview a few from your area via phone before meeting.
Step 2

Don't be afraid to ask questions. Most, if not all advisors, will offer a free consultation to discuss how they can help you. This is your chance to interview them in person and ask questions.
Step 3

Go to Finra.org (see resources) to get a background check on the advisor and see if he/she has been sued or has any client complaints against them. Obviously, if the advisor has several complaints for unsuitable recommendations, you don't want to entrust your money with that person. Just because an advisor works for Merrill Lynch, Smith Barney, or any other large brokerage firm, (see resources), doesn't mean the advisor has a clean track record. Stay away from an advisor who claims he/she specializes in all areas of financial planning. It's very tough to be an expert in so many areas unless working with a team.
Step 4

Find out key information: what is the advisor's professional background, including how long they've been in the business and how long have they've been an advisor specializing in their area of expertise? What did they do before? Were they a car or pharmaceutical salesperson, etc. before entering the financial field? How are they compensated? Do they charge an annual fee based on assets under management or financial planning services? Do they work off commissions? Is there a potential conflict of interest in the way they are compensated by you? Are their financial interests in line with yours, and most importantly, how are they going to help you achieve your goals? (see resources)
Step 5

Ask what they can do for you. Most advisors focus on financial planning, but these plans are only as good as the portfolio supporting them. You might have the most comprehensive plan in place, but if your assets go down 50%, the plan means absolutely nothing. Managing and protecting the investments in the plan are more important than the plan itself. How is the advisor going to manage your assets? Mutual Funds, stocks, bonds, etc.? Will you be put in a cookie cutter investment program where the advisor is just a middleman and makes no recommendations or adjustments, or will the advisor actually provide advice and guidance? This is one of the ways of determining the answer to the all import question - Advisor or salesperson?

Comments

jcp2 said

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on 12/2/2009 Great advice. We all need to be smart with our money these days! 5*

scottmitzi said

on 11/25/2009 These are great suggestions. Our advisor is from a nation wide business and we just went to his office. They work on commission so it shouldn't cost anything to meet with an advisor and get a "gut" feeling about the person you are working with. Ours is great.