What to Look For in a Financial Advisor

  • by

That is an interesting question given that you are asking someone who wants to have you as a client! It is unfortunate that there are 1,000 media stories about deceitful scam artists who pose as financial advisors and fleece older people who really are just looking for a way to manage the few dollars they have managed to squirrel away for retirement. But the vast majority of financial advisors, especially those who are connected to a company, are good, hardworking people who are honestly trying to help others.

Just because someone is working independently as a financial advisor does not mean they cannot be trusted. And that is the first qualifier for taking advice from one of us – trust. With the Internet and all the information out there available, there are too many people who believe they can plan for retirement on their own. You may be smart enough to know the facts and plan the strategies, but getting the results you want is a whole different ballgame. So trust plays a crucial role because there is accountability to a real person instead of a website. I found that this is especially true for people very close to retirement and those who are already retired.

References are huge, but don’t get too carried away with someone who has a truckload of them. Bernie Madoff had some of the best references you could want if you asked one of his celebrity friends. Need I say more? If you go to someone who has great references, look for the education factor added to the trust. That may seem biased because I have a degree and a certification, but you have to find someone who your financial advisor is responsible to. Besides, if your advisor is with a company and there is some shenanigans, there is a very good chance you will get some or all of your money back since there is a certain amount of government oversight that goes with starting an investment firm.

The third quality I would look for is whether you can have an easy conversation with them. You know, where you can just sit down and talk without a lot of formality or being all-business about things. The best financial advisors are the ones who get to know their clients well as people, so can understand what they really want. You will find out some of the clients do not tell you what they really want because they don’t know themselves. Retirement is a big step, and while you can prepare financially for it, there are a lot of other things people go through that don’t fit into a spreadsheet or can be done on a calculator.

As you can see, the people factor is probably the most important thing when it comes to choosing a financial advisor. I found that if you treat people like people they will respond in kind and you will both be better off in the long run. Remember that switching financial advisors can be both tricky and unsettling, especially if you have been using the same advisor for many years. In some ways it is like making a new close friend. If you ever had to part ways with a close friend, you understand this much better. So be careful and take your time.