How to Hire the Right Type of Financial Advisor

How to Hire the Right Type of Financial Advisor

Most Americans today are facing some type of financial stress. Whether it be from increased spending due to skyrocketing inflation, worrying about market volatility and whether they can afford to retire, or fearing they’ll lose everything due to a possible recession.

If this sounds like you, it may be time to hire a financial advisor to help get your finances on track and put your mind at ease. But finding the right financial advisor means choosing between hundreds of options. What should you look for in a financial advisor? How do you choose? 

Here are 6 questions to ask to help you find a trustworthy financial advisor who’s right for you:

Is the financial advisor a fiduciary?

Not all financial advisors are certified fiduciaries. Some are merely registered investment advisors or managers. These advisors may have to meet certain standards, but they aren’t required to put your interests ahead of their own.

A certified fiduciary is someone who is legally required to act in your best interests. 

Certified fiduciaries must also adhere to certain ethical rules and regulations set by their professional organization, such as the Financial Industry Regulatory Authority (FINRA). If your financial advisor isn’t a certified fiduciary, it means there’s no way of knowing whether they’re acting in your best interests or not — which could mean trouble down the road.

What is the advisor’s fee structure?

Financial Advisor showing their list of fees.jpg

A financial advisor’s fee structure can vary widely, so it’s important to understand how they make money before deciding whether to work with them. Some independent advisors charge an hourly rate or flat fee; others charge according to assets under management; and some receive commissions on products they sell.

The way in which advisors are compensated can have significant implications for you as an investor. For example, if your advisor charges fees based on assets under management, he or she will have an incentive to keep your account size large — even if that means putting too many of your eggs in one basket. Similarly, if your advisor gets paid by selling certain products, he or she may be inclined to recommend those products over others that might be better suited for your situation.

How much experience does the advisor have?

One of the most important questions you should ask a potential financial advisor is, “How much experience do you have?”

It’s easy to say, “I’ve been in the business for 25 years.” But what does that mean? How much experience do they have working with people like me?

You want to make sure your advisor has experience working with clients like you. That means that he or she has worked with people who have similar goals and needs as you.

If you’re looking for someone to help plan for your retirement, it’s important that your advisor has experience working with retirement planning clients. If you’re looking for someone who can help with college tuition planning, it’s important that your advisor has experience helping parents plan for their children’s education.

Who will you be working with at the firm?

Some firms employ teams of advisors who are all licensed to sell products and make recommendations on behalf of their clients. Others have fewer advisors who focus on specific areas of expertise or client situations. If you’re looking for an advisor who can offer advice across multiple areas of your finances, it’s important to know whether they’ll be able to provide this service or if you’ll need to work with additional professionals at their firm or elsewhere.

How often will you meet with your advisor? Some people prefer in-person meetings while others are just as happy communicating via email or phone calls periodically throughout the year. Find out how often they like to meet with clients so you know what kind of schedule works best for both parties.

Can they provide some kind of guarantee or comfort level regarding their services and outcomes?

Offering guarantees is tricky. This implies that if your investments fail, there is some sort of safety net. And there is a harsh reality about that safety net:

If they offer a guarantee on results, they are lying. There’s no way anyone can guarantee that they’ll beat market averages over time — it’s just not possible. But there are so many factors at work here that even if an advisor wins 10 out of 10 years, there’s still no guarantee they’ll win next year or the year after that (and so on).

However, they can guarantee they will work hard and diligently to make you money. Any guarantees on the quality of customer service or communication could be genuine. There are no guarantees in investing. But there are guarantees with a financial advisor who is working hard to make you money and provide quality service.

So don’t expect a guarantee — just look at their track record and trust that they’ve done well enough in the past to make you confident they’ll continue doing well into the future. 

Do you like this Financial Advisor’s personality?

As with any relationship, it’s important to know what you want before looking for a potential partner. If you’re looking for someone to help guide you through your retirement years, finding someone who specializes in retirement planning will be much more beneficial than someone who offers financial advice on all fronts. However, personality fit is also crucial.

Evaluating the financial advisor’s personality is critical. If you don’t like them, don’t hire them. It’s important that they’re trustworthy, ethical and easy to work with — especially if they’ll be handling sensitive information about your finances or investments.

A good financial advisor should listen to your needs first, then offer solutions that fit your situation. They should take into account all aspects of your financial picture, including retirement income planning, taxes, social security, insurance and estate planning — not just investment advice.

There are many things to consider when choosing a financial advisor, but it’s important to not rush into anything.

In a nutshell, finding the right financial advisor takes time but is essential to your financial well-being. You must actively search for someone who is the most qualified, aligns with your goals and needs, and has your best interest. Putting in the extra effort now will likely save you financial stress in the future.

You can start the process by sitting down for a consultation with one of our financial professionals. Schedule your complimentary financial analysis here. We value transparency and will meet with you to answer your questions and discuss your goals. If we seem to be a good fit we will schedule a follow up meeting to review your current financial situation and retirement income needs and show you where more planning may be necessary.

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Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Intelliplan Financial and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice.

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