Best Financial Advisors

Choosing a financial adviser is a process that requires time, patience, and a clear understanding of what you are looking for in a financial professional. While there are many experienced, qualified financial advisers in the industry, finding the one that matches your style, expectations, and financial situation is not easy. In this article, we will discuss how to go about finding the best financial adviser.

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Finding a Financial Adviser in Your Area

Most investors who are establishing a new relationship with a financial adviser prefer to work with one in their area. This allows easy in-person meetings and the ability to get to know an adviser more thoroughly than is possible online or over the phone. Additionally, advisers in the US have “Know Your Customer” regulations that will preclude them from taking money or trading instructions from someone they have not met. In order to meet federal regulations, they have to feel comfortable that they have a good understanding of your financial goals, risk appetite, and current financial situation. Do not invest money with an adviser who refuses to meet with you in person.

An excellent way to find an adviser in your area is to search FINRA’s Broker Check database (which will also tell you what licenses the broker holds as well as any disciplinary actions), the CFP Board’s search directory as well as the Fee Only Planners Association’s online search tool. Once you have a list of names, search for them online to find their business site or listing which should give you information about their area of specialization.

If you have particular needs or prefer a financial adviser with experience in a specific area, it may be a good idea to ask friends or coworkers for advice or see if your local business association has any recommendations.

Digging Through the Alphabet Soup of Financial Certifications

There are many certifications in the industry which can tell you about a financial adviser’s level of experience and training. All advisers who sell investment products in the US must have their FINRA Series 7 license as well as a state Series 63 or Series 66. Some will have insurance licenses which allow them to sell annuities and life insurance.

An increasingly popular certification is the Certified Financial Planner (CFP) designation, which requires financial advisers to have at least three years of experience, complete a course of study, and pass a rigorous examination.

Other common certifications include the Chartered Financial Analyst (CFA) certification which requires three years of study and indicates that a charter holder has significant skill in securities analysis; and the Chartered Financial Consultant (ChFC) which is a similar, but less rigorous, certification to the CFP.

Once you have a few names, check around online for reviews, complaints, or any experiences that others have posted online. It is an unfortunate reality that people tend to blame their advisers when their investments lose money, so take complaints in that vein with a grain of salt. However, complaints about communication, risk, or customer service should probably be taken more seriously.

Determining Your Investment Style and Goals

Before approaching a financial adviser, determine with your spouse and family what your goals are. Do you need a financial planner to help you establish a budget and plan for the future? Do you need investment and retirement planning advice? Do you need comprehensive business and family financial advice? Once you have some answers to these questions, you can begin to look for financial advisers who offer the particular mix of skills and services that you need.

Many financial firms and advisers specialize in a particular investment style. Some advisers specialize in more “conservative” long-term investing, while others favor an active, higher-growth style. A good adviser will ask you detailed questions about your investment horizons and appetite for risk, but it is a good idea to run through a few questions and scenarios yourself. You don’t want to waste time with an adviser who only offers blue-chip stocks and mutual funds when you want derivatives and offshore hedge funds in your portfolio. Conversely, you don’t want to feel pressured into high-risk/high-growth investment products if you are a buy-and-hold investor. Determining up-front what your overall investment style is will save everyone time and effort.

Evaluating an Adviser

Once you have a short list of advisers, make appointments to see them in person. Be certain to meet with at least two or three advisers so that you don’t make hasty decisions and can deliberate with enough information to make a good choice.

Advisers are often gifted salespeople, and can make clients both comfortable but pressured to invest. Never work with an adviser who pressures you to make a sale. A qualified adviser will use the first meeting to discuss your goals and current financial situation, and present any advice or suggestions at follow-up meetings. Take any material or investment product information home to consider in private.

Be sure that you understand how a financial adviser is being paid. Payment structures can vary tremendously, however, the general styles are as follows: Fee-only planners charge by the hour or by a flat account fee and do not make any money through commissions or investment loads. They can be expensive but offer very impartial advice. Fee-based planners are paid through a combination of account fees and commissions.

Commission-based financial advisers only make money when you trade, which can save small investors money but can lead to sales pressure and slanted advice.

Consider the following questions when making the decision to choose an adviser:

  • Does this adviser listen carefully to my goals and risk profile?
  • Do his or her suggestions demonstrate an understanding of my needs?
  • Does this adviser make me feel comfortable and not pressured?
  • Does this adviser offer the types of services I want?
  • Did the adviser explain payment structures and disclose how he or she makes money?
  • Does this adviser promise investment performance or make hyperbolic statements?
  • Does this adviser have experience or additional certifications?

Don't Put It Off, Jumpstart Your Retirement Plan Today

A comfortable retirement can only be secured with prudent planning, aggressive saving, and disciplined investing. Online research is a good start, but consider the benefits of discussing your options with a qualified financial advisor. The alternative could mean lost opportunities, higher fees, and lack of discipline. Request a free, no-obligation consultation today.

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