Seeking Financial Advice

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Seeking Financial Advice

Maybe your nest egg becomes larger than you’re comfortable managing on your own. Or you need estate planning advice. Or you could use some tax help. Even do-it-yourselfers sometimes find the need to work with a financial professional. To choose an advisor who suits your financial needs and personality, follow these four steps.

Decide what you want

Are you looking for someone to handle one part of your financial life, such as taxes or estate planning, or are you seeking a financial advisor who can take care of it all? Knowing the answer to that question helps you narrow your search to those advisors with skills to match your needs

Once you’ve set your priorities, begin your search by asking your accountant or attorney for recommendations. Query friends and professional colleagues who work with advisors. Identify a handful of advisors whose services meet your needs, and then call to determine how much money you’ll need to become a client. Confirm their services and specialties. After you’ve found a few good matches, schedule initial meetings, which should be free of charge.

Ask the right questions

Bring to that first meeting a checklist of questions, concerns, or issues you want addressed. Ask for and scrutinize a copy of the advisor’s resume, known as the ADV form, as soon as you walk in the door. ADV forms include advisors’ educational backgrounds and list which professional designations they hold. In Part 2A or the "brochure" part of the form, you’ll discover how advisors are compensated, and whether they have business ties to particular insurance or mutual fund companies. If these ties exist, they should be disclosed to you in writing.

If you’ll be relying on the advisor for investment suggestions—which funds or stocks to buy—be sure the two of you share the same investment philosophy. Ask advisors to walk you through their investment process, and to explain thoroughly what would make them sell a stock or fund. Request a copy of a typical financial plan.

Calculate the cost

Don’t leave an advisor’s office until you completely understand what the advice will cost—and get those details in writing. Have the advisor estimate what it will cost to create your plan and manage your investments, including both fees and commissions.

Conduct a background check

Ask the advisor for references from investment professionals (such as certified public accountants or certified financial planners) or attorneys who have seen the advisor’s work before. Such professionals have reputations they won’t want to jeopardize.

Next, contact professional and government regulatory organizations to verify that no disciplinary action has been taken against your candidate. Some resources are the CFP Board of Standards, the Financial Industry Regulatory Authority, and the Securities and Exchange Commission.