What to look for in a Financial Advisor

Written by Cathy on March 3, 2014

financialadvisor

Most people - even financially savvy ones - have a hard time determining the details of their financial plan. Which stocks or mutual funds are right for their portfolio? How much cash should they have? How much do they need for retirement?

A good financial advisor can help answer these questions and many more. When looking for a financial advisor, consider the following:

What are your goals? - It will be much easier to find the right financial advisor for your situation if you know what you want out of the relationship. Some people might want help preparing for retirement, whereas another person might want assistance in setting up a long-term plan for a disabled child. Financial planners have different areas of expertise, so it's in your best interest to know what area of expertise you want the most in your financial advisor.

References - Word of mouth can be a great way to find a financial advisor. In addition to friends and family, good sources to ask are your accountant and lawyer.

Learn the credentials - There are several different certifications that financial planners can have. Among the most common are:

  • Certified Financial Planner (CFP®) - This is perhaps the most respected financial advisor credential. Recipients must have at least three years of experience, pass a rigorous exam, and adhere to a specific code of ethics.
  • Certified Public Accountant (CPA) - CPAs have extensive training in accounting practices, and must pass a rigorous exam.
  • Personal Financial Specialist (PFS) - A PFS is a CPA who has received additional training in estate planning, retirement planning, investing, insurance and other personal finance topics.

How is the advisor paid? - The most objective advisors are generally fee-based advisors who receive a flat fee for their services. Some advisors are commission-based, meaning their income is dependent on the investment products that they sell. Many advisors offer some combination of the two. You'll have to decide what you're comfortable with, and how much you are willing to pay your advisor.

Interview the advisor before committing to a relationship - Ask lots of questions to determine the advisor's area of expertise, and whether he or she can help you achieve your goals. Let the advisor ask you questions, because a good financial planner will want to know about your background, your family, and your goals, and not just your financial figures such as income, assets and debts. And trust your instincts about whether you and the advisor have a good rapport, and whether or not he or she is someone you can trust.


Mar3

financialadvisor

Most people - even financially savvy ones - have a hard time determining the details of their financial plan. Which stocks or mutual funds are right for their portfolio? How much cash should they have? How much do they need for retirement?

A good financial advisor can help answer these questions and many more. When looking for a financial advisor, consider the following:

What are your goals? - It will be much easier to find the right financial advisor for your situation if you know what you want out of the relationship. Some people might want help preparing for retirement, whereas another person might want assistance in setting up a long-term plan for a disabled child. Financial planners have different areas of expertise, so it's in your best interest to know what area of expertise you want the most in your financial advisor.

References - Word of mouth can be a great way to find a financial advisor. In addition to friends and family, good sources to ask are your accountant and lawyer.

Learn the credentials - There are several different certifications that financial planners can have. Among the most common are:

  • Certified Financial Planner (CFP®) - This is perhaps the most respected financial advisor credential. Recipients must have at least three years of experience, pass a rigorous exam, and adhere to a specific code of ethics.
  • Certified Public Accountant (CPA) - CPAs have extensive training in accounting practices, and must pass a rigorous exam.
  • Personal Financial Specialist (PFS) - A PFS is a CPA who has received additional training in estate planning, retirement planning, investing, insurance and other personal finance topics.

How is the advisor paid? - The most objective advisors are generally fee-based advisors who receive a flat fee for their services. Some advisors are commission-based, meaning their income is dependent on the investment products that they sell. Many advisors offer some combination of the two. You'll have to decide what you're comfortable with, and how much you are willing to pay your advisor.

Interview the advisor before committing to a relationship - Ask lots of questions to determine the advisor's area of expertise, and whether he or she can help you achieve your goals. Let the advisor ask you questions, because a good financial planner will want to know about your background, your family, and your goals, and not just your financial figures such as income, assets and debts. And trust your instincts about whether you and the advisor have a good rapport, and whether or not he or she is someone you can trust.

About Cathy
Cathy is the founder of Chief Family Officer, where you can get daily updates on the hottest deals, and tips to achieve financial freedom and family bliss.