Your money is important to you, right?  If it wasn’t you probably wouldn’t be here right now.   Well I think your money is important too which is why I’m going to cover some tips on how to find a financial advisor.   Finding a financial advisor is a big deal because this person is going to be responsible for explaining to you what your financial options are and guiding you on what your next money moves should be.   They will help you make investment decisions that can greatly impact your financial state, for better or for worse, so you want to make sure that when you are choosing a financial advisor you don’t act too quickly, take your time, ask a lot of questions and learn a lot about their background.

how do you find a financial advisor?

Ask Friends and Family

The first thing I suggest is to ask friends and family for recommendations.   Typically if someone has a good portfolio and they are doing well with their money chances are they probably have or have at some point had a financial advisor.   You can tell a lot about a recommendation by what your friends or family say about this person right of the bat. If they hesitate, take the name to be polite but put it at the end of the list. If they rant and rave, move them to the top.  Ask them how long they have had them as their financial advisor and what types of services they provide.  Get a feel for their relationship with this advisor.

Reputable Companies

Another way is to go with reputable companies in your area that you’ve heard of.  Check them out online, google for reviews to see what others may have to say about them and write a few down based on what you find.   You can find a lot of information online these days so searching their company name ahead of time is a good idea.

Go Straight to napfa.org/

Here’s the first thing you’ll read when you visit http://napfa.org/

National Association of Personal Financial Advisors, is the nation’s leading organization dedicated to the advancement of Fee-Only comprehensive financial planning.  Consumers and the media look to NAPFA for access to financial advisors who meet the highest standards for professional competency, comprehensive financial planning and Fee-Only compensation.

As you can see they do their homework to ensure that only the financial advisors who meet their highest standards are listed.

Now as you can see by the napfa.org link listed, they only provide fee only financial advisors.  Now if you are new to finding a financial advisor you may not be sure what that means.  Essentially there are a few ways a financial advisor can get paid: commission only, fee only or fee and commission based.

So how do you know which one to choose?

My preference is to go with a fee only financial advisor.  The reason for that is because while financial advisors should have your best interest at heart, sometimes dollar signs can quickly take over.  Commissioned based advisors may try to sell you on an investment or a product that you don’t really need but may pay them a nice commission and so their interests have now gone from your best interest to theirs.  A fee-only financial advisor will discuss your needs and what you’re looking for and will give you a fixed rate for their services no matter what products they have to offer.  Now, not all commissioned financial planners are like this. There are plenty commissioned financial planners that have your best interest at heart and realize that the better they make your money work for you, the more money they will get and the more likely you are to stay with them as well as recommend new customers.  So it’s your preference as well as your confidence level in choosing a financial advisor.

There is also the fee based advisor. This is different from a fee ONLY advisor. A fee based advisor may start out with a fixed fee but if they sell you on any products they will earn commissions on those as well.  So again, if they are easily persuaded by dollar signs in THEIR pocket they may not have your best financial interests in mind.

Once you find a financial advisor or have a list put together the next step is to meet with them to do an interview.  Even if you have a raving review from a friend or family member you should still interview at least 3 to get a better idea of who is a best fit for you.  You want to take into consideration the different types of licenses they may have, whether you have a good rapport with them, can they provide you with the list of services you are looking for and things of that nature.

This process should take a little time and next up we’ll talk about some of the important questions you should ask your financial advisor prior to hiring them!

Filed under: Personal Finance

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