Nine Issues to Consider When Selecting a Financial Advisor
First, is the financial planner experienced? Years of education will do little if your advisor doesn't have the applied experience necessary. You should ask them about the breadth of the problems that they have solved, their existing clients, and their depth of experience. You may not consider your questions to be complicated, but you are likely unaware of the myriad of strategies the advisor could pursue in your behalf. It often takes years of apprenticeship for the planner to be prepared to approach the issues that you may face. This can be especially true in the areas of estate and tax planning. There are many novices out there presenting seminars with only a basic understanding of the principals they are teaching.
Second, what is your advisors educational background? You'll want to look for genuine credentials such as Chartered Financial Consultant, Certified Financial Planner, Certified Public Accountant, Certified Life Underwriter, Juris Doctor, or other legitimate credentials. These indicate an educational background in finance, business, insurance, law, accounting, etc. and require years of experience and/or comprehensive examinations from accredited institutions. Beware of quickie course designations such as the CSA, which only require a two-day course and minimal knowledge of planning topics.
Third, is the planner committed to high ethical standards? The advisor should hold membership in at least one industry association (Society of FSP, NAIFA, etc.). Most of these associations require adherence to a code of ethics. Of higher concern are planners that use their affiliations to bypass the establishment of trust.
Fourth, is there a commitment to continuing education? Complex laws are ever-changing and the economy never holds still. How many hours are spent each year keeping skills sharp? Are the continuing education hours at a beginning, intermediate, or advanced level?
Fifth, what services do you need? Comprehensive retirement, tax strategies and estate planning? Solely tax advice? An investment advisor? Real estate advice? Or, is he just an insurance salesman? Identify an advisor that emphasizes the services you need.
Sixth, is your financial planner a solo-practitioner? What kind of support team does the advisor have to bounce ideas off of, and to provide additional perspective? Is the firm large enough to provide all of the resources you should expect from your planner?
Seventh, what is their clientele like? You want to find a financial planner that handles similar clients to yourself. If you have a net worth of $200,000, but your advisor primarily handles people with a net worth of $5 million and up, are you going to receive the attention that you deserve? Are there other advisors with the firm that may be better suited to your situation? Does the advisor have a particular age demographic, or preferred client type?
Eighth, how is the planner compensated? Are they paid by commission, fee only, or a combination of the two?
Finally, is your advisor a professional? Be wary of persons who are merely part-timers working out of the trunk of their car, lack membership in professional societies, omit commitment to continuing professional education, and criticize others who do commit to high standards. Often they will downplay the need for education, or boast they "know more about estate planning than most attorney's out there." Smooth salespeople are often very charming, and may even present a charismatic public seminar-but they may also be dangerous because they don't know what they don't know.
Second, what is your advisors educational background? You'll want to look for genuine credentials such as Chartered Financial Consultant, Certified Financial Planner, Certified Public Accountant, Certified Life Underwriter, Juris Doctor, or other legitimate credentials. These indicate an educational background in finance, business, insurance, law, accounting, etc. and require years of experience and/or comprehensive examinations from accredited institutions. Beware of quickie course designations such as the CSA, which only require a two-day course and minimal knowledge of planning topics.
Third, is the planner committed to high ethical standards? The advisor should hold membership in at least one industry association (Society of FSP, NAIFA, etc.). Most of these associations require adherence to a code of ethics. Of higher concern are planners that use their affiliations to bypass the establishment of trust.
Fourth, is there a commitment to continuing education? Complex laws are ever-changing and the economy never holds still. How many hours are spent each year keeping skills sharp? Are the continuing education hours at a beginning, intermediate, or advanced level?
Fifth, what services do you need? Comprehensive retirement, tax strategies and estate planning? Solely tax advice? An investment advisor? Real estate advice? Or, is he just an insurance salesman? Identify an advisor that emphasizes the services you need.
Sixth, is your financial planner a solo-practitioner? What kind of support team does the advisor have to bounce ideas off of, and to provide additional perspective? Is the firm large enough to provide all of the resources you should expect from your planner?
Seventh, what is their clientele like? You want to find a financial planner that handles similar clients to yourself. If you have a net worth of $200,000, but your advisor primarily handles people with a net worth of $5 million and up, are you going to receive the attention that you deserve? Are there other advisors with the firm that may be better suited to your situation? Does the advisor have a particular age demographic, or preferred client type?
Eighth, how is the planner compensated? Are they paid by commission, fee only, or a combination of the two?
Finally, is your advisor a professional? Be wary of persons who are merely part-timers working out of the trunk of their car, lack membership in professional societies, omit commitment to continuing professional education, and criticize others who do commit to high standards. Often they will downplay the need for education, or boast they "know more about estate planning than most attorney's out there." Smooth salespeople are often very charming, and may even present a charismatic public seminar-but they may also be dangerous because they don't know what they don't know.
About the Author:
Hank Brock is president of Brock and Associates, LLC, a firm specializing in retirement, estate, tax, and business planning. Be sure to check out Hank's article on finding a financial advisor for more extensive information.
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