3 Steps to Finding the Perfect Financial Adviser

Feeling confident in your financial decisions often requires the help of a skilled and reliable adviser.

A professional can help you create the path to your investment goals, whether that means generating immediate returns, providing college education for the kids, securing a comfortable retirement or all of the above.

The challenge is choosing the right person.

As you consider candidates, think about what you expect out of the relationship. Get recommendations from friends, family and others you trust — particularly if they are in a similar stage of life, with the same financial needs.

Your accountant or lawyer may be another good source for referrals, depending on their familiarity with your circumstances.

Another idea is to use a free service that matches you to fee-based financial advisers in your area. One that we work with and recommend is Wealth Ramp. (Check it out. … It’s pretty cool!)

Once you think you have some potential candidates, ask them these questions:

1. What are you going to do for me?

After giving a potential adviser information about your situation, turn the tables: Ask the adviser exactly what you can expect from him or her.

You probably want an adviser who will look at your situation from a holistic point of view. That means things such as your:

  • Investment portfolio
  • Tax situation
  • Retirement planning goals
  • Estate planning desires

2. How are you paid?

Avoid advisers who have a financial incentive to focus on the offerings of particular firms, or on specific investments. These are commission-based advisers, and they make money on products they sell to you. So, their advice may not be in your best interest.

Money Talks News founder Stacy Johnson recommends choosing a fee-only adviser — meaning they charge an hourly rate — to eliminate potential conflicts of interest. You can find such an adviser through organizations like the National Association of Personal Financial Advisors and the Garrett Planning Network.

In any case, make sure you are clear about what you are getting and how you are being charged.

“No matter how they get paid, ask them how much it’s going to cost, so you know,” says Stacy.


3. What are your credentials and disciplinary history?

You don’t just want to ask this question — you want to verify it as well.

If a professional claims a credential like the “certified financial planner” (CFP) designation, consult the online registry of the organization that offers the designation.

For example, to confirm whether someone is a CFP, use the Certified Financial Planner Board of Standards’ “Verify a CFP Professional” tool.

Other helpful tools include FINRA’s BrokerCheck and CFTC SmartCheck.

BrokerCheck is a database maintained by the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that oversees people and firms that sell securities like stocks and bonds.

As FINRA describes it:

“BrokerCheck helps you make informed choices about brokers and brokerage firms — and provides easy access to investment adviser information. … BrokerCheck gives you a snapshot of a broker’s employment history, regulatory actions and investment-related licensing information, arbitrations and complaints.”

CFTC SmartCheck is offered by the U.S. Commodity Futures Trading Commission (CFTC), which polices the derivatives markets. As the agency describes it:

“CFTC SmartCheck gives you easy access to free tools to check the background of financial professionals and stay informed on the latest fraud schemes — directly from those who regulate financial professionals.”

Do you have hints or tips for getting the most value from a financial adviser? Share them in comments below or on our Facebook page.

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