shopping for a financial advisor

Shopping for a Financial Advisor? 8 Things You Need to Know

It’s time. Your financial situation is getting more complex and you have less time and energy to devote to it. You need some financial help, and decide it’s time to go shopping for a financial advisor. Where do you go from here? Here are 8 key factors to consider before partnering with a firm:

referrals matter

Referrals from friends, co-workers or other professionals are a great place to start. But be sure to give each referral the weight that it deserves by carefully examining the advisor relationship. What do they like about the advisor? How long have they worked with the advisor? How often do they meet? What topics are covered at the meetings? Who calls the meetings? Does the client request the meetings or does the advisor reach out to the client? How responsive is the advisor to requests for service? Next, check the firm’s website and read your prospective advisor’s biography before you call for an appointment. What designations do they have? One prominent designation is the CERTIFIED FINANCIAL PLANNER (CPF) designation. These professionals are required to pass a rigorous two-day exam, have at least three years’ experience and complete ongoing education.

compliance matters

Several governmental and professional organizations regulate the activities of financial advisors. Be sure to use the Financial Industry Regulatory Authority (FINRA) Broker Check (you can do it online by visiting or the Texas Department of Insurance, to see if your potential advisor has any prior or pending actions. If the initial review goes well, the next step is to prepare yourself for your first meeting with the advisor.

goals and risk matter

Be sure your advisor has a clear picture of your current financial situation, your attitude toward investment risk, and your financial goals – both the essentials, like saving for retirement or college, and the dreams, like owning your own business. Consider whether the advisor’s approach is too conservative or too aggressive for you. If possible, try to meet other members of the advisor’s support team. Remember that you’ll be interacting with the firm as well as the advisor.

The team matters

Some financial advisors work alone, while others work as part of a team. If other professionals are on that team (such as estate planning attorneys, CPAs and tax professionals or insurance agents) you’ll want to understand how these professionals are associated with the advisor and how they are compensated. You may want to get a list of their names to check their backgrounds as well.


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costs and services matter

Ask about the advisor’s suite of services offered and how they are compensated for their efforts. Keep in mind that compensation and service offerings vary greatly. You should be clear on the terms an advisor uses. An advisor may describe his or her service as fee-only, which likely means that the advisor charges a flat or hourly fee. The advisor may also charge based on a percentage of the investments he or she will manage on your behalf, or via commissions paid by the provider of the investment sold to you. Never assume anything. If fees are not clear or transparent to you, ask more questions. While no single model is right for everyone, it is important to understand how your advisor is compensated and what services you should expect from the advisor.

timing matters

Most clients seek out an advisor during or after a significant transition (e.g. job loss,
career change, marriage, a new baby, children going to college, retirement or even divorce). Think about how much easier your transition will be financially and emotionally if you begin working with an advisor beforehand in order to plan for these eventualities.

transition matters

Once you have decided to engage the advisor it is important to understand the steps needed to effect the transition. Will accounts need to be moved? Will existing investments have to be sold to make the transition? What costs will you incur for making the transition? Then finally, it is important to understand your exit options. The advisor should be able to quickly walk you through both your transition to their firm, as well as a potential transition from their firm.

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monitoring matters

Engaging a financial advisor is not a license to ignore your financial obligations. You still need to pay attention. This is your financial future, regardless of who is playing on your team. An experienced and qualified advisor will likely have tools available to assist you in monitoring the progress of your financial plan. Surely the financial success you’ve had so far is in great part due to careful planning in your business endeavors. Apply the same care and attention to your hunt for a financial advisor. Taking these steps will help you connect with the advisor that is right for you and your financial future.


This article was originally published in the Spring 2014 Issue of VETTA Magazine.

IDF Editors

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