4 Things to Look For in a Financial Advisor header image

4 Things to Look For in a Financial Advisor

Perhaps you’re a couple of years into your first job, and are contributing to your 401(k). Maybe you have a family and a mortgage, and are thinking about your next steps. Or maybe you’re an empty nester, and looking forward to retirement. Whatever your stage in life, you might come to a point where you’re wondering: Do I need help investing my money? At this point, you’re probably considering a financial advisor, but how can you find a financial adviser you can trust? Use these four tips to help you make a decision that works for you, no matter your stage in life!

Question 1.) What Certifications Do They Have?

First, you’ll want to research the credentials of any potential financial advisors. By definition, “financial advisor” is a term for anyone who provides financial advice in return for compensation. When choosing a financial advisor, it’s a good idea to start looking for a Certified Financial Planner (CFP). This designation indicates that your advisor has completed extensive exams in areas like financial planning, taxes, insurance, estate planning and retirement.

In addition, certain licenses can be an indicator of what services or products a financial planner can provide. The most common licenses to look for include:

FINRA Series 6: Looking for a financial planner who can sell mutual funds? You’ll want an advisor that has passed his or her Financial Industry Regulatory Authority Series 6 exam.

FINRA Series 7: The Series 7 license is for advisors who want to serve as general securities representatives. This means they can buy and sell all securities products, like stocks, bonds, mutual funds and fixed-income investments.

NASAA Series 65: The North American Securities Administrators Association has a series of exams to confirm an advisor has the knowledge needed to practice in certain areas of the country. This is for investment advisors that manage accounts and portfolios for clients for a fee, but who do not buy and sell securities themselves.

NASAA Series 66: This is for financial advisors that want to serve as broker-dealers, who are licensed to buy and sell investment products, as well as investment advisors, who are licensed to provide financial advice for a fee.

Question 2.) How Do They Get Paid?

Financial advisors do not work for free. Typically, they are paid two different ways:

Fee-Only: This means your financial advisor will charge you a rate based on what assets they are managing.

Commission: A financial advisor may also be paid via commission, based on what products you purchase from him or her. This is more common when selling annuities, life insurance or disability insurance.

Determining what a financial advisor will charge and when can help you make a decision that works best for you. Feel free to sit down with the advisor and ask what he/she charges for their services. There may be an initial planning fee, for example. Cost shouldn’t be your only factor in choosing a financial advisor, but it’s best to understand these aspects up-front.

Question 3.) What Type of Clients Do They Typically Work With?

When choosing a financial advisor, you’ll want to get a feel for what kind of clients they typically handle. Some financial advisors have a specialty they are known for. If you have a specific interest that is important to you, like charitable giving, finding a financial advisor that has experience in this area can be very beneficial.

In addition, it’s important that a financial advisor work at the same scale you are. Your needs can be very different if you’re just starting out versus just a few years from retirement. You want a financial advisor who understands your goals and will help you achieve them.

Question 4.) Can They Work With You?

Finally, it comes down to personalities; can you see yourself working with this person, and vice versa? How much contact do you want with your financial advisor, and will you be working one-on-one or with a team? All of these customer service touches can make or break a working relationship, so it’s important to determine what you expect from a financial advisor beforehand. He or she will be helping you manage your money - that requires trust and clear expectations.

Investing In Your World

Choosing a financial advisor is a big task, but by asking the questions above, you’ll be equipped with the information you need to make a choice that’s right for you and your future.

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