Hiring a financial advisor can be a stressful process because it’s hard to know where to start. Do a quick google search and it’s likely that you’ll have hundreds of advisors in your general area to choose from.
Here are 8 tips to keep in mind when searching for a financial advisor
1) Interview multiple advisors
Ask family and friends who they are using and see if they’ve been happy with their advisor’s advice, customer service and fees. Go sit down with at least three different advisors at three different firms.
2) The personality test
When interviewing, make sure your personality and the advisor’s is a good fit. This is going to be the person potentially handling your life savings so you want to make sure that you can get along with them. Communication is key in the advisor and client relationship so hire someone that you feel comfortable with.
3) Hire a Fiduciary
A fiduciary is an advisor that puts your best interest in front of their own. Now you might say that all advisors should do this, and I agree, but many do not. Matter of fact, a large number of advisors only have to do what is “suitable” for you and not what’s in your best interest.
4) Ask the Advisor about how they get paid?
Are they paid by commission, charging a fee on your assets or charging by the hour?
What, if any, are the fees? There can be management fees, IRA account fees and inactivity fees… just to name a few.
5) Service Schedule
How often can you expect to hear from the advisor? Some advisors might be able to tell you specifically that you can expect four calls a year and two face-to-face meetings. Other advisors might not be as accommodating. Keep in mind, a financial advisor does not work for a non-profit. They are going to make money off of you so make sure you are getting the service that you are paying for. If not, it’s time to find another advisor.
Insider Tip: Most advisor’s will segment their book of business by breaking their client base down to something that looks like this:
A Clients: Over $1 million in assets
B Clients: Between $250,000 to $1 million in assets
C Clients: $0 to $250,000 in assets.
The A and B clients typically get good service but if you are a C client with your advisor, then don’t expect much in the way of contact. It’s not right but it’s the way the business has gone for years. If you want more attention, find an advisor that is willing to give it to you, no matter how much money you have.
6) What type of products do they use?
You want an advisor that puts your interests first. To do that, an advisor should be able to swivel to different products and management options based on your needs. If you look around the advisor’s office and see a bunch of awards from insurance companies and all they can talk about is annuities, then let me give you some advice. “Get up and get out” You want options and to be educated on them.
7) Ask about qualifications, training and experience in the financial industry.
This is important to find out because again, this is going to be someone that you are potentially going to hand over your life savings to.
8) Check them out on https://brokercheck.finra.org/
This is the official website by FINRA where you can check on your financial advisor’s credentials and compliance record. I’d highly suggest you looking up the advisor that you’re thinking about hiring just to make sure there isn’t a pattern of bad behavior. Some advisors are very slick, and you might think there isn’t a need to do any homework, but you might be surprised. Take a few minutes to make sure.
I’ve said this many times before, “Nobody cares more about your money then you do” so if you plan on hiring an advisor, please take the time to do a little extra work. Your future and your money will thank you later.
Live free my friends,