What to Look For in a Financial Advisor

I’ve been getting this question for years: ‘How do I find a financial advisor I can trust?’ 

Answering this can be tricky because when it comes to finding the right person to help with your finances, one size does not fit all. That’s often because we have varying levels of comfort with handling money and investments during different stages of our lives, so some of us may need more hand-holding than others.

For many people, a financial advisor who charges by the plan, or even by the hour, can offer a cost-effective way to make sure you’re on the right track with your financial life. And when it comes to your hard-earned money, using a fiduciary — an advisor who is legally bound to look out for your best interest and isn’t going to try and sell you products you may not need — is often the way to go.

Let’s take a look at some options available in the fee-only financial advisor space.

Resources For Finding Qualified Financial Advisors: 

The Garrett Planning Network, at www.garrettplanningnetwork.com/, is a group of fee-only independent financial advisors. They charge a set fee, not a commission or a percentage of your assets. Their advisors will also work on an hourly basis, so you can contact a planner for a few hours of guidance, if that is preferred, instead of a more costly comprehensive plan.

The XY Planning Network also offers a nationwide group of sworn fiduciaries who are fee-only financial advisors. On their website – www.xyplanningnetwork.com/ — you can search by location or specialty, or even a keyword, such as GenX or retirement planning, depending on your needs.

You can also search on NAPFA.org, the National Association of Personal Financial Advisors, the Certified Financial Planner Board of Standards, or the Financial Planning Association.

Word of mouth works, too. Ask your trusted friends and family members if they work with an advisor they would recommend. Your colleagues, in particular, could be helpful here, because they are likely to be in a similar financial situation, including sharing the same 401(k) plan and other benefits. On a side note, I hired my current financial advisor after seeing what a good job he did handling my mother’s accounts.

Vetting Your Advisor

Once you have the names of a few potential advisors, you should ask for references from them – and then reach out to those people. Advisors found through all the sites mentioned above should have the proper certification, but during your first in-person or virtual meeting, you can ask for the advisor’s ADV Form, Part II, from the Security and Exchange Commission (SEC). It will tell you how the advisor is compensated and list any conflicts of interest – including whether they are earning a commission for recommending certain investments.

Go With Your Gut

As you narrow your search to a few candidates, keep in mind this is likely going to be a long-term relationship. That means you should seriously consider how comfortable you feel with the advisors you talk with. Do they seem empathetic? Are they good listeners? Are they upfront about all the ways they get paid for their services? Open and honest communication is key in this relationship, so if you can’t bring your true self to the table, you won’t get your money’s worth.

Plan Annual Check-Ups

After you pick a financial advisor and find a strategy that works for you, the work isn’t over. Financial plans are not something you should set and forget. Why? We get married and divorced. We welcome children into our lives. We change jobs and get raises. Because life can take some twists and turns, it’s smart to check in with your financial advisor once a year. They can help you review everything from insurance coverage to 401(k) plans to ensure you’re still moving in the right direction. Go ahead and set an appointment with your advisor a year out so it’s already on the books. You won’t regret it.

With Reporting By Casandra Andrews