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Seven Steps to Finding the Best Financial Advisor

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It’s crucial to find the right person for your family.

Hiring a financial advisor means taking on an expert partner in financial planning so that you can have peace of mind as you pursue your financial and life goals. It should be a long-term decision, and one you don’t undertake lightly. After all, it’s akin to hiring a chief financial officer for your family, so your financial advisor has to be someone you feel you can trust and work with for many years to come.

Given the importance of finding the right person, you should take your time before making a selection. Here are seven steps to take as you move forward with your decision.

Step 1: Consider the Different Types of Financial Advisors

Not all financial advisors are created equal, so it’s important to be choosy based on your individual needs. Some will offer financial planning services but not investment management, while others are the opposite. Some may have expertise in an area of particular importance to you, such as retirement planning or wealth accumulation.

As a starting point, consider which of the following are most important to you:

  • Financial Planning. This service covers a lot of ground, including saving, what types of insurance policies you need and investment advice.
  • Investment Advisory Services. This service focuses on investment strategy and management, including things like asset diversification.
  • Retirement Income Planning. This service helps you coordinate all the aspects of your retirement planning, including Social Security, pensions, investments and tax liability with the goal of providing a long-lasting income stream.

Gaining a better understanding of services available and identifying which of them meet your needs will assist you as you move forward in making your selection.

Step 2: Seek Out Reputable Financial Advisors with the Proper Credentials

Financial advisors obtain credentials by passing exams that require them to demonstrate proficiency in financial subjects. However, not all credentials are equally impressive.

Be sure to look for financial professionals with the most reputable and respected credentials in the industry. This means seeking out a Certified Financial Planner (CFP), a Personal Financial Specialist (PFS) or a Chartered Financial Analyst (CFA). These designations require strict adherence to ethics policies, as well as continuing education.

Step 3: Understand Financial Advisor Compensation

There are several compensation models for financial advisors, including asset-based fees, hourly rates and commissions. However, if you’re looking for a professional who is unbiased and objective, you’ll likely want a fee-only financial advisor. This ensures your financial advisor isn’t working toward company incentives or sales goals, but is instead focused on what is best for you.

It’s important to note that non-fee-only financial advisors aren’t necessarily poor choices. In fact, sometimes they make the most sense. It’s all dependent upon your individual needs. For example, if you’re making a large, one-time investment that will not require ongoing guidance, choosing an investment advisor who earns a one-time commission may be optimal for your circumstances. Typically, though, it’s advisable to choose a fee-only advisor if you plan to develop a long-term relationship with someone who can continually assist you as your financial needs and goals evolve.


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Step 4: Perform an Online Search

If you know the services, credentials, and compensation model you want in your financial advisor, you can utilize one of these financial advisor search engines to help you narrow down the options in your area. However, many financial professionals offer services to remote clients, too. So, you won’t necessarily be limited by geography, unless face-to-face meetings are preferable to you. With today’s video call technology, however, it’s possible to speak remotely while looking one another in the eye even if you’re not in the same room.

Step 5: Ask Questions

You’re bound to have some specific questions for your financial advisor candidates, and the information they share will tell you quite a bit about their level of knowledge. However, asking questions is also a great way to determine whether a particular advisor communicates in a way that feels comfortable and helpful. You won’t click with everyone, and that’s to be expected, so work to find someone whose communication style matches your needs, too. You should never choose a financial advisor who appears frustrated by your questions or makes you feel as though you can’t be forthright in your discussions.

If you need ideas regarding specific questions to ask, take a look at these sample questions. You may also want to ask for references, though you should be aware that privacy laws prohibit many financial advisors from giving out the names of clients. These same regulations prohibit them from using client testimonials, so consider it a red flag if a financial advisor is using them.

Step 6: Verify Credentials and Reputation

Even if you hit it off with a financial advisor in an interview, you’ll still want to double-check their legitimacy. To do so, you can verify their credentials and complaint records with the Financial Industry Regulatory Authority, the Security and Exchange Commission or membership organizations they claim to be associated with.

Additionally, you can use this online tool to check out which organizations a financial advisor is registered with. It will also provide you with complaints reported against them or disclosures of interest. Keep in mind that a complaint doesn’t automatically mean the advisor did something improper, or that you should rule them out as an option for your needs. Many advisors who have been in business for a long time have at least one complaint on their record. Multiple complaints, however, may be cause for concern.


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Step 7: Protect Yourself from Fraud

When you give someone custody of your assets, it’s easier for them to perpetrate harmful fraudulent activity. Reputable financial advisors will use third-party custodians to hold your assets. Essentially, they open your accounts at well-known and long-standing firms, and they are able to do things like place trades for you on your account. However, it is the custodian that will offer you protections such as verifying signatures and reporting transactions to you. You should use caution if your financial advisor is also the custodian of your money, or if they own the firm that is acting as the third-party custodian. (This is how Bernie Madoff was able to defraud thousands of clients.)

Additionally, be on the lookout for advisors who recommend other firms to you that they happen to co-own. Any potential conflict of interest of this nature should be disclosed in Form ADV with the Securities and Exchange Commission.

Selecting a financial advisor is a decision you should take seriously. At WellAcre, we believe in helping you carefully construct a plan that will take you where you want to go. As a fiduciary, we are legally required to work in your best interests, and we take pride in helping our clients achieve their dreams. We specialize in supporting creative professionals and business owners build their wealth sustainably.

If you’re ready to take your financial planning to the next level, please click here to schedule a meeting with us. Together, we can help you create the life you dream of for yourself and your family.

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© Wellacre Global Wealth Advisors 2020

WellAcre Global Wealth Advisors is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where WellAcre Global Wealth Advisors and its representatives are properly licensed or exempt from licensure.  This website is solely for informational purposes.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by WellAcre Global Wealth Advisors unless a client service agreement is in place.