Choosing the Right Financial Advisor

Sep 16, 2020 | Financial Planning

Choosing the right financial advisor can be compared to finding the right spouse. Like a marriage, a relationship with your financial advisor should be strong, and your morals and beliefs should align. You also need to have the ability to speak honestly with each other and work together. By choosing the right CFP®, navigating your financial plan can be more rewarding and less stressful.

Different Types of Advisors

Before marrying your money away to a new financial advisor, you should make sure to find one that fits you. There are many different financial advisor platforms, and each one is designed to meet the needs of different investors.

For example, there are automated platforms that provide very generalized advice, like many computer-based advisors. And on the opposite end of the spectrum, there are personal wealth managers who will meet with you in person or via web conference to develop a financial plan tailored to your specific situation. By understanding the different types of advisors, you can better determine which type of advisor is right for you.

How to Choose the Right Financial Advisor

So how do you determine which type of advisor is right for you? It depends on your needs.

Are you looking for help with only one aspect of your financial picture, or do you need more comprehensive planning? Do you like to meet face-to-face with your advisor, or do you prefer a more informal relationship? Answering these questions will help you focus on the type of advisor that is the best fit for your situation.

After determining the type of financial advisor that fits your needs, you can start asking friends and family for recommendations, or simply search the internet to find a list of financial advisors near you. Once you have a list of advisors to evaluate, there are many different factors to take into consideration before deciding which one will ultimately be the best fit for you.

Cost and Compensation

The first thing many people want to consider is the cost of the advisor. Although this may seem counter-intuitive, you probably shouldn’t base your decision entirely on cost. The more standardized the service gets, the cheaper it should be. The more advanced advisors, including those with proven track records, vast experience or more resources, might cost a little more.

Another important aspect of the cost that you should consider is how the advisor is paid. There are advisors who receive fee-based income only, for example a percentage of assets under management or a flat fee for services provided. In many cases these fee-based advisors come with credentials and should act in your best interest.

Other advisors may be compensated via commissions or a combination of fees and commissions. Commissions come from certain investment products that mutual funds or insurance companies will pay an advisor to advertise and sell to its customers. This can create an incentive for that advisor to not act in your best interest, if it helps to enrich themselves. Although these investments can sometimes be a good choice, always look carefully at an investment that pays your advisor a commission.

Credentials

When searching for the soul mate for your cash, it is important to look past the cost and analyze the advisor on a personal level. There are many indicators of an advisor’s performance and credibility that can be found through online research and through talking to their other clients.

One valuable indicator of a credible advisor is whether they are a CERTIFIED FINANICAL PLANNER™. A CFP® needs to pass an exam, show history of working in the industry and follow the standard of highest care set by the CFP® Board of Standards. Of course, this is not a sure-fire way to prove 100% credibility, but it is a great start.

Fiduciary Obligation

To help prevent conflicts of interest, find an advisor who is obligated to act as a “fiduciary”. Being a fiduciary means that the advisor has pledged to act only in their client’s best interest. There are many free tools online, such as the Investment Advisor Public Disclosure website, that can be used to check the background of a perspective advisor and their firm. This tool lists official certifications, like CFP®, in addition to any investigations or criminal charges that have impacted the individual or the firm.

Find Your True North at Brookstone Wealth Management

Just like a relationship with a potential spouse, there is a great deal to think about when it comes to keeping your money safe and growing. Finding someone you can trust with your money, who understands you as an individual as well as your financial goals, can help you make decisions that will pay off for a lifetime.

If you are looking for an advisor in the Columbus, GA area, contact Brookstone Wealth Management today. Let our CFP® get to know you and your specific needs, so we can help you find your True North.