Five Tips on Picking a Financial Advisor

Posted November 22, 2008 by Bernz

780691A financial advisor is someone who you really need to trust because he is investing your most valuable resource, your money in the form of your risk capital. There are a few initial things to remember at a minimum, any advisor should have at least one (usually both) of these credentials: CHFC – Chartered financial consultant or CFP – Certified financial planner. All registered advisors have an ADV which goes through their compensation, education, and how they invest. It is very helpful in helping you learn about them so ask for one!

So here are 5 things that you should look for in a good financial advisor.

Tip 1:

Look for a comprehensive financial planner who can coordinate an overall plan to deal with your investments as well as your education, retirement, estate, insurance, and tax plans. Specialization is nice, but if you are looking for someone to help you coordinate all of this, then he needs to be able to manage it all with you.

Tip 2:

Go independent! Financial planners through companies are great for their resources, but can only sell products through that company which put them and you at a disadvantage.

Tip 2:

Check an advisor’s complaint and disciplinary history by doing a name search on the website for FINRA, the Financial Industry Regulatory Association.

Tip 3:

Look for an office where several advisors have banded together. It is impossible for one person to know about everything that goes into a person’s financial life so having others with other expertise areas is crucial.

Tip 4:

Find out in advance what a financial advisor will cost you. Some charge an hourly fee. The industry average is about 250-dollars an hour. Others charge a flat fee ranging from 500-dollars all the way up to 15-thousand-dollars depending on your plan’s complexity. Still other advisors charge a commission on the products they sell you or a percentage of the value of the assets they manage for you. It’s usually about 1%.

Tip 5:

Its always your money! In picking a financial advisor look for someone who wants to educate and help not just take over your whole financial world for you.


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One Response to “Five Tips on Picking a Financial Advisor”

  1. Jeff Rose Says:
    November 25th, 2008 at 4:35 pm

    Couldn’t agree with you more. The mark of the CFP has a lot more clout than a CHFC in the industry. I recently joined an independent firm from a wirehouse model and the differences are tremendous. Stay away from insurance agents trying to sell investments, especially if they only offer insurance. You want an advisor that has choices to offer.

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