Commentary: How you can find a financial adviser that's right for you
For our regular readers, you know we believe that a good financial adviser providing comprehensive financial advice is a wise investment. It's a belief based on both academic data and our decades of experience in the industry. But how do you know...
For our regular readers, you know we believe that a good financial adviser providing comprehensive financial advice is a wise investment. It's a belief based on both academic data and our decades of experience in the industry. But how do you know if the prospective adviser you're working with is a "good" adviser?
It's an understandable concern, especially when bad actors in the industry can dominate headlines. To help you on your search, these are the things you can do to better ensure a prospective adviser is right for you.
Check with Regulatory Agencies.
The two major regulatory agencies in the financial services industry, FINRA and the SEC, allow you to review an advisor's regulatory record for free. FINRA offers their BrokerCheck on their website (brokercheck.finra.org), and is mandated to be linked to from the advisory firm's website. You can find the SEC's Investment Adviser Public Disclosure tool on their website (adviserinfo.sec.gov). Both of these tools are an invaluable resource that allows you to review an adviser or advisory firm's regulatory record.
Talk with Friends and Family Who Work with an Adviser.
If you know someone who works with a financial advisor, speak with them to identify what they like-and perhaps what they don't like-about the advisor they're working with. If you've never met or worked with a financial advisor before, this gives you some solid context when preparing to interview a prospective advisor. And if the person you speak to loves their adviser, it may be a good idea to see if they can provide a referral.
Interview several advisers
No matter how much or how little you may have enjoyed meeting with the first adviser you speak with, take the time to interview several different advisors. This gives you the opportunity to compare different advisors and evaluate how their different philosophies and approaches to financial planning reflect what you're looking for from your adviser.
It's also a great idea to come equipped with a list of questions, and ask each advisor the same questions. Asking about the advisor's experience in the industry, their fee structure,
what their client experience is and what types of clients they specialize in serving are just
some of the key questions that will help you identify whether an advisor is right for you.
Understand which standard the advisor operates under.
Financial advisers may be held to either the suitability standard or the fiduciary standard. The suitability standard means the advisor must make recommendations that are suitable for you whereas the fiduciary standard means the advisor must make recommendations that are in your best interests There may be reason that working with an adviser held to the suitability standard is appropriate for you, but if you're looking for a long-term partnership, we believe the fiduciary standard is preferable.
Engaging with a financial adviser can be a bit of a leap of faith, and it's hard to truly know how your experience working with an advisor will be until you actually begin working together. The advisor you ultimately opt to partner with is someone you should feel comfortable working with, and doing these four things should help you feel more confident that the adviser you're working with can help you reach your long-term goals.