From fees and commissions to stocks, taxes, and retirement options, financial advising can seem complicated and confusing to even a seasoned investor. If you’re thinking about investing or saving, it’s wise to do your research so you can choose a trustworthy financial advisor to help you navigate the process. But where to start? As consumers, we have plenty of options. When your money is at stake, it’s crucial to become familiar with the industry, so you can protect and strategically grow your assets.
At Out & About Communications, we specialize in the financial services industry. We have worked with numerous wealth management and financial advisory companies of varying employee and asset size. We’ve seen it all. We know what has helped clients and what hasn’t, so we have a close take on what investors need to keep in mind when selecting an advisor.
We’re sharing what we’ve learned from working on the inside to provide some valuable insight into choosing a financial advisor and firm you can trust.
What’s in a name?
When scouting a new financial advisor, a single title can tell a story.
Are they a Registered Investment Advisor (RIA), fiduciary or financial advisor?
RIAs and fiduciaries are considered fee-only, meaning they don’t work off commissions. Financial advisors who don’t have this distinction, sometimes referred to as fee-based, are most likely compensated based on the products and services they refer to their clients. While this isn’t necessarily a red flag, with the potential to earn significantly lucrative commissions, this could mean you walk away with products or services you may or may not need. Held to a different ethical and legal standard, RIAs and fiduciaries dedicate their time to recommending options that are in their clients’ best interests, without being tempted by a big payday.
Do they have any certifications or affiliations?
Whether they’re a CFP® (CERTIFIED FINANCIAL PLANNER™), CPA (Certified Public Accountant), or other designation, these acronym endorsements are a good thing. It demonstrates advisors are investing in continuing education and staying well versed in their field. It’s a bonus if they’re a member of NAPFA, the National Association of Personal Financial Advisors, an association for fee-only advisors.
Have they built an online presence?
When you pop the advisor’s or firm’s name into a search engine, what do you find? Their online presence can tell you a lot about what to expect when working with them. If the website is outdated or they’re not connecting on social media, they may take a more traditional, “old school” approach to planning. While this may be your preference, these types of advisors or firms may not be positioning themselves for sustained growth, or be familiar with the needs of a younger client base. It’s beneficial to know systems and practices in place so you can depend on the advisor or firm as a long-term partner.
On the other hand, if the firm or advisor has a more savvy online presence, you may expect some modern conveniences like electronic onboarding, web conferencing, and other services that may better suit your needs.
File this under, “The More You Know”: Due to regulations, financial advisors can’t promote client testimonials of any kind in their advertising. Be wary of positive or negative testimonials you find online.
What are their intentions?
Communicating clear objectives up front will help manage expectations on both sides of the table. Understand the advisor’s approach and philosophy: are they more focused on savings, stocks, or overall wealth management? The answers will determine if they will be able to help you save for a house or your child’s college fund, or if they can develop a holistic, graduated plan through your retirement years. Ask about the services provided, their thoughts on mixing up strategies and their goals for your relationship.
What do your instincts tell you?
Choosing to invest your hard-earned money in a committed plan with anyone is a decision that requires ample research, and a good old-fashioned gut check. You’ll potentially be working with this firm and advisor for decades, divulging personal information, and acting on recommendations that could affect significant areas of your life. Trust is paramount to ensure this person has your best interest in mind. Do your interactions foster peace of mind? Are they responsive to you and your needs? Can you see yourself partnering with this person through your wealth accumulation, as well as retirement years?
Financial advisors are not all created equally. Taking the time to research and interview candidates can be the difference between a prosperous financial partnership or just another disappointing transaction.