5 Tips For Finding Your New Financial Advisor

You have big financial goals, and finding the best financial advisor to make these goals achievable is a big decision. Comprehensive financial planning is crafted by qualified financial advisors and is based on a thorough understanding of you and your financial objectives. 

The relationship between an investor and their advisor should be a partnership that includes open communication. You should take your time researching the qualifications and business practices of the financial advisors you are most interested in. 

Leave the guess work out of your financial planning and talk with a financial advisor. Schedule a complimentary conversation with Financial Freedom to see if we’re a good fit for your needs. 

 At Financial Freedom Fee-Only Wealth Management, we know you have many choices available. But, what exactly should you look for when searching for your new financial advisor? To help you with this decision we suggest considering the following 5 key points. 

1) Certifications and Education

The most reputable financial advisors will have quality certifications. It is important to note that not all certifications are created equal. The best financial planning certifications require at least an undergraduate degree, as well as passing required examinations to obtain the designation. 

Advisors must also complete continuing education credits to maintain their certification and remain in good standing. Staying current on regulatory updates, as well as all financial topics, is critical in order to best advise clients. Legislation is constantly changing in ways that impact clients’ financial situations.

There are many financial advising certifications, ranging from generalists to specialists. The Certified Financial Planner™ (CFP®) designation is the industry standard for personal financial planners and provides a broad foundation on all core financial planning topics. 

For clients with complicated tax situations or small businesses, Certified Public Accountants (CPAs) can provide accounting services and tax advice, and Enrolled Agents® (EAs) can provide detailed tax guidance. 

With over 45 years of combined experience, we are an all-CFP® team at Financial Freedom Fee-Only Wealth Management and we are here to help you reach your financial goals.

2) Standard of Care

Financial advisors differ in the standard of care they are required to provide their clients. The suitability standard of care requires only that advisors’ recommendations be appropriate for clients. 

In other words, advisors are allowed to recommend products that provide them greater commission fees, as long as the product is appropriate for the client’s financial situation. Financial advisors who adhere to a suitability standard typically work at banks or at brokerage firms.

The fiduciary standard of care, on the other hand, requires that advisors place their clients’ needs before their own. They must recommend the products and services the advisor truly believes are in the client’s best interest, regardless of compensation. All Registered Investment Advisors (RIAs) are required to be fiduciaries, including CFPs® and CFAs®.

The financial advisory industry as a whole is moving toward requiring that all financial advisors be subject to a fiduciary standard of care. However, as long as standards of care vary between advisors, it is important to ask any financial planner you are considering their own standard of care. 

For advisors for whom their standard of care varies for different tasks or services, find out under which circumstances they have a fiduciary responsibility.

3) Fee Schedule

Financial planners are compensated either through fees that their clients pay them (termed “fee-only” planners), through commissions, or both (“fee-based” planners). Clients who work with a commission-based advisor do not directly see their advisors’ compensation. 

Instead, the advisor receives a commission on the product (such as an insurance policy or a mutual fund) that the advisor recommends or sells to the client. 

On the other hand, fee-only professionals receive no outside or hidden compensation for their recommendations, removing any conflict of interest on recommendations advisors make. Advisors’ approaches to charging these fees vary, and some advisors provide financial guidance only, while others also manage their clients’ investment portfolios. 

These advisors may provide financial planning as a service included within their clients’ investment management fees, while other planners may charge separately for financial planning services. 

For financial planning services that are not built into an advisors’ portfolio management fees, clients may pay a one-time fee or an hourly fee to establish their financial plan. After the plan is developed, advisors may charge clients an ongoing retainer fee to be paid quarterly or annually, which generally includes access to the advisor, quarterly or annual meetings, and minor updates to the client’s financial plan.

At Financial Freedom Fee-Only Wealth Management, we are transparent about the fees we charge our clients. If after our initial complimentary consultation it appears we will be a good fit for your needs, the next step is the development of a comprehensive financial plan. 

Preparing this comprehensive financial plan is billed to you at an hourly rate. After the plan has been prepared and assuming we are a good fit, an ongoing wealth management relationship will continue as retainer based financial planning. In all cases, all fees are discussed in advance before any commitments are made. 

4) Expectations for the Working Relationship

The services and products financial advisors provide their clients also vary, including comprehensive financial reports, referrals to other professionals, investment management, and consultation with other professionals such as insurance agents or estate attorneys. 

Advisors also differ in how they interact with and work with their clients. For example, advisors have different communication styles, responsiveness to clients’ questions or requests, and investment and financial planning philosophies.

Prospective clients should find out how the advisor typically advises clients. For example, some financial planners primarily offer an entire financial plan for a single fee, while others usually have an ongoing relationship with their clients, whether through asset management fees or separate retainer fees. 

Regarding the meetings themselves, some advisors are comfortable conducting virtual meetings with out-of-town clients, while others prefer in-person meetings.

In all areas of the working relationship, advisors should provide a level of transparency in their process that does not hide any details from clients who would like this information. A quality advisor will provide further information that the client requests as well as his or her reasoning and process, rather than attempting to guard information. 

At the end of the day, it is important that you feel good (have a good comfort level) that you can build trust and a strong personal relationship with the advisor you choose.

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5) Referrals and Reviews

Referrals are a valuable resource for those seeking a new financial advisor. Ask for recommendations from friends and family with similar life circumstances. If you use other financial advisors, such as CPAs or insurance agents, ask them if they have any recommendations. 

Financial planning firms may have online reviews you can check. The CFP® website also provides the contact information of all CFP®s in good standing, and you can search for these professionals based on their location. 

If you are trying to decide between multiple financial planners, contact them with questions on any of the points discussed earlier. Many will offer free or inexpensive consultation meetings, and those who do not will typically answer your questions via email. As you prepare to hire one, ask them for references to talk with a current client for additional feedback.

Find out what your experience would be like if you were their client, including the services you would receive, the frequency of their contact and communication, and how they would develop your financial plan. 

Conclusion

It is well worth your time and effort to find a financial advisor who is well-qualified and with whom you are happy to work, because you may be beginning a working relationship that will last years or decades. At Financial Freedom Fee-Only Wealth Management we take the long view when it comes to working with our clients. We want to ensure that the life you envision for yourself in the future comes true based on the financial plan we help you build today. And at Financial Freedom you will be working directly with the owners of the firm. To learn more about us, click here.