What To Look For in a Financial Advisor

» by Jason Print, CFP® and Chad A. Warrick

If you’re unsure how to achieve your short-term and long-term financial goals, a financial advisor is an excellent resource. However, the wrong advisor can limit your growth by recommending poor financial decisions or acting in a company’s best interest—not yours. Learn what to look for in a financial advisor who will align with your needs and help you make the best financial decisions for your situation.

4 Steps To Take Before Selecting a Financial Advisor

Not all financial advisors are created equal, nor do they perform the same tasks. A financial advisor at one company could perform completely different duties than another, so it is crucial to do research when looking for a financial advisor.

Here are four steps to take before selecting a financial advisor.

Decide What Kind of Financial Advisor Is Best for You

Financial advisors can perform several different duties. You should look for an advisor who specializes in the service you need, which could include:

• Retirement planning
• Wealth management
• Estate planning
• Investment advising
• Tax management
• Financial planning
• Business financial advising

If you need simple investment advice, you may want to opt for a robo-advisor, which automatically invests funds. However, robo-advisors can only perform specific tasks and won’t take your individualized needs into account. Individuals with more complex financial needs should opt for a traditional advisor who can discuss goals and provide face-to-face guidance.

The more complex your needs, the more specialized your financial advisor should be. If you’re not sure what to look for in a financial advisor, search for a firm in your area with several areas of expertise.

Check For Credentials

The term “financial advisor” isn’t affiliated with a specific credential. If you want to find the most reputable, educated professional to provide financial advice, look for the following titles:

• Fiduciary: Financial professionals or firms that follow the fiduciary standard promise to act in your best interests. Fiduciaries must avoid conflicts of interest, which means they won’t push a specific financial product to make more commission. If a financial advisor is not a fiduciary, they might make recommendations that benefit them more than you.
• CERTIFIED FINANCIAL PLANNER™: A CFP® professional should be high on your list of what to look for in a financial advisor. Financial advisors must meet educational requirements and pass a lengthy exam covering financial planning, insurance, taxes, retirement, and estate planning. All CFP® professional have a fiduciary duty to their clients.
• Registered Investment Advisor (RIA): Firms that advise clients on investments, have more than $25 million of assets under management, and register their status with the Security and Exchange Commission (SEC) are RIAs. Companies must disclose fees, key officers, conflicts of interest, and disciplinary actions against employees to be eligible.

While there is no universal method to verify a firm’s fiduciary credentials, you can ensure your advisor is a CFP® professioinal by verifying their status with the CFP® Board. You can also search the SEC’s database to access registration, certification, and background information.

Determine How They Earn Money

One of the most important things to look for in a financial advisor is a clear, transparent payment structure. Knowing how an advisor gets paid helps you determine if they have your best interests in mind.

If an advisor receives commissions on insurance or stocks, you may want to avoid their services. Additionally, advisors that work for or contract with a specific company will likely promote their products and not necessarily the best products for your needs. For unbiased advice, search for a fee-only financial advisor.

All fiduciaries charge clients using a fee-based model, which could be hourly or a percentage of your managed assets. While these fees can be costly, they ensure you receive impartial advice.

Schedule a Consultation

It’s often difficult to know what to look for in a financial advisor until you interact with a few in person. These meetings often signal what not to look for in an advisor. Anyone that can’t clearly explain what they do and how they make money is probably not the right choice for your personal finance needs.

During a financial advisor consultation, you should ask several questions:

• Do they have any client requirements? You may need an account minimum to work with your preferred advisor. If you don’t fit their profile, consider a relationship elsewhere.
• How do they get paid? You should understand exactly how a financial advisor gets paid before pursuing a relationship. If a potential partner can’t clearly explain their fee or commission structure, they might not act in your best interest in the future.
• What are their credentials? When evaluating individual advisors, be sure to ask about their credentials and verify them independently.
• How will our investment relationship work? Do you prefer your financial advisor to be hands on or only contact you when something significant happens? The answer will help you determine what to look for in financial advisor consultations.

Are you looking for a fiduciary firm with the most experienced, client-focused team of CFP® professionals? Schedule a complimentary consultation to see if Summit is the right choice for you.

Choosing a Financial Advisor Is Simple With Summit

If you’re wondering what to look for in a financial advisor, you’re probably ready to take the next step and form a partnership with someone you trust. At Summit, we make that process easy. Our company is an RIA, and we’ve built up an expansive team of certified professionals, from CFP® professionals to Certified Valuation Analysts. For nearly 40 years, we have upheld the fiduciary standard.

From our four convenient locations around Florida and Michigan, we provide peace of mind for countless clients. We specialize in the following services:

Financial Planning

Our team can help you achieve your financial goals through strategic tax management, asset protection, retirement planning, and more. We communicate through various avenues, both digital and in-person, to make sure you feel involved and heard.

Wealth Management

We work with the financial institution of your choice to maximize your returns at a comfortable risk level. We use an evidence-based approach to diversify your portfolio and create a long-term financial plan customized to your needs.

Business Solutions

If you need expert advice to improve your company’s bottom line and find tax-saving solutions, our professionals are here to help. We help you avoid costly issues with retirement plans and other financial liabilities.

If you want to work with an experienced CPA who upholds the fiduciary standard during every transaction and interaction, schedule a consultation today.