What To Look For In A Financial Advisor

Choosing a financial advisor is a weighty decision, and proceeding with caution can help ensure that you select the right person for your financial needs.

While it may not be possible to pursue all the avenues suggested below, accomplishing as many as time and access permit will help you gain a fuller understanding of the advisors you interview and the firms or professional practices they represent.

• Choose a Fiduciary Financial Advisor: This ensures that the advisor has a legal obligation to act in your best interest, provide all relevant information, and disclose, in advance, any potential conflicts of interest.
• Take the Time to Carefully Vette the Advisors You are Considering: Be mindful that not all financial advisors are created equal, and given the importance a superior financial advisor can play in helping you work toward accomplishing your financial goals, it’s a decision well worth the time and effort required to get it right. So, carefully research and compare the advisors on your “short list,” and find the one you really would like to work with.
• Ask Them About Their Credentials: Ensure that your advisor holds appropriate certifications, such as CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst). These qualifications indicate a significant level of professionalism and expertise. Asking potential advisors about licenses awarded and credentials earned is an important part of the interviewing process.
• Make Certain Their Strategy for Building and Managing Assets Aligns with Yours: The approach to and attitude regarding risk can vary tremendously from one financial advisor to another. Some may lean heavily toward aggressive stock investments, while others may encourage more secure investments in bonds or CD’s. Be cautious of advisors who push high-risk investments without considering your risk tolerance and financial goals. It’s always wise to look for an advisor whose risk tolerance either matches or is willing to match yours.
• Explore the Issue of Fees Prior to Committing: Financial advisors charge for their services in a variety of ways. Some advisors are “fee only,” charging a flat rate regardless of usage. Others may take a percentage of all assets under management. Still others may take a percentage of the annual increase in the value of assets under management. Some may earn commissions directly from mutual funds or other financial products, which could present a potential conflict of interest. Make certain you understand how the advisors you are considering are compensated and be wary of those who charge excessive fees or who are not transparent about their fee structure.
• Get a Feeling for Their Accessibility: An effective way to get a fix on how available they might be when you need them, and how much time and attention they will be able to spend on your account, is to ask them how many clients they manage. An advisor with too many clients might not have enough time to give you the personalized attention you deserve and need.
• Carefully Review Their Range of Services: Determine at the outset whether the menu of services offered by the financial advisor is appropriate to your current and future financial needs. For instance, does the advisor offer retirement planning, tax advice, investment management and other services you expect to need over the course of the relationship.
• Look for a Good Communicator: The best advisors communicate clearly and regularly. Be cautious in your search if you encounter advisors who are difficult to reach or who fail to explain complex financial concepts in understandable terms.
• Probe for Tecno-savvy: Make certain the advisor you choose uses up-to-date technology and tools to manage and track your investments. Advisors who lack experience with modern applications and technology may not be able to provide the level of service your account deserves.
• Avoid a Niche or Specialty Advisor: Unless you are looking for just a single service or product it is prudent to avoid niche or specialty financial advisors whose expertise and focus is limited. Examples would be trust or retirement specialist. Make certain the advisor you select is experienced in all the areas that relate to your specific financial situation, needs, and goals.
• Think Long-Term: Look for an advisor who is interested in building a long-term relationship with you rather than just making quick profits or short-term gains.
• Find Out if He or She Has a Succession Plan: Ask your prospective advisor about their succession plan. If something happens to them, you want to be sure there is a clear plan in place for someone else to take over your account in a seamless fashion. Think seriously before engaging a financial advisor who lacks such a plan.
• Determine if They Have Been Transparent About Their Past Performance: Advisors should be open and honest about both their successes and failures. Lack of transparency on their part should be a major red flag.
• See What Others Have Said About Them: Check for any negative reviews, complaints, or disciplinary actions through regulatory bodies like FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure (IAPD).

For more information or to locate a fiduciary financial advisor in Central Florida, click here.