7 Tips for Selecting a Financial Advisor

When you start reading a book, you are investing time and energy, hoping it will be worth it. You sit down, begin reading and quickly start wondering how the story will play out. There are emotional swings along the journey, but you stay positive, thinking that it will all work out for the main character(s). Even when bad things happen as you continue to flip through the pages, you start to believe the author has a pleasant surprise in store for you and that all will come together as it should.

Now imagine this book is based on your financial life. You wouldn’t want to invest the time, energy and emotion reading it just to find out at the end that you never should have picked the book up. What you should do instead, is work with a financial advisor who can help you develop the story and write it with the ending you have in mind. An advisor who walks you through the details so you can tell the story the way you imagined it and have the ending you long for.

Following the steps below can ensure you are working with the advisor who is right for you. The advisor who will help you create the life you want.

1. Do You Share Financial Priorities?

When you talk about retirement and what your plan is for your golden years, your financial advisor should share your vision. You should look for someone who is not only experienced, but someone who is trustworthy and can provide you with solid strategies for achieving your goals. The advisor should also be able to provide you with the services you need so you can be confident in your retirement planning. The “right” advisor will provide you with understanding, guidance and fiduciary-based advice that will help you achieve your goals. (For related reading, see: Find a New Financial Advisor Who's Right for You.)

2. Ask Questions

There are so many options out there and so many advisors. They each boast about their value add and will talk to you about their benefits, so don’t be afraid to ask questions. Make sure you understand the details of what the advisor can offer, both in their products and services. Break down the products and find out why they would be best for you. Then discuss the services, their value and how they align with your goals. This is not the time to be shy. Investigate and probe. Only then can you be comfortable with the information you obtain, so that you know you are making the right decision. 

3. Understand What You Are Paying For

As the client, you should have a clear understanding of how your advisor gets paid. This includes not only their fixed fees, but any residuals and commissions they may receive. No matter what option(s) you select for your investments, there will be fees associated with them. But by researching and asking the right questions, you may be able to lower the fees you pay. Run an investment-fee analysis so you can see exactly how much you are currently spending on an annual basis for maintaining your portfolio. (For related reading, see: Paying Your Investment Advisor—Fees or Commission?)

4. You Can’t Believe Everything You Read

We all know that the internet contains a plethora of information, but as the old saying goes, “Don’t believe everything you read.” When you do your research online make sure the information you are getting is credible. Learn about the site and who publishes it. Read about what the site's motivations are. What is the message they are trying to convey? Read the About Us page and get as much valuable information from the site as you possibly can.

Always keep in mind that there is nothing more valuable than having a team of experienced and trustworthy professionals on your side.  A team who is recognized and has received kudos for their work in the financial services industry, specifically in helping people with their retirement planning.

5. Is the Financial Advisor Educated?

Don’t be afraid to ask your potential advisor about their education, what type of degree they have and where they achieved it. Also probe your advisor for information on what they do to remain educated and on top of their financial game. An advisor who not only keeps up on required education but who continues to pursue as much industry knowledge and additional credentials as possible is typically better suited to give professional advice than an advisor who doesn’t keep up with the industry outside of their own business. It is vital that your financial advisor stays current on the financial products and strategies available so your portfolio can perform its best in today’s fast-paced, volatile markets. (For related reading, see: Keeping up With Your Continuing Education.)

6. Create an Experienced Team

It’s impossible for a person to know everything, no matter how much education or experience they have. That is why it’s important to have a team of experienced professionals to help you achieve your retirement goals. That team could include a CPA, estate planning attorney, a financial advisor and perhaps also a licensed insurance agent. A good financial advisor will be able to help you in putting this team together. You should always do your research to make sure that each of these professionals has experience in working with people on retirement planning and achieving their retirement goals.

7. Get a Second Opinion

You wouldn’t have a major surgery just because a doctor told you to without getting a second opinion. So why wouldn’t you seek the advice of another financial advisor if you have concerns with your current advisor? Look for another professional to help you who will make you feel comfortable. Just because you have worked with someone for years doesn’t mean that your current advisor is giving you the best option(s) for creating tax-efficient retirement income plans. You want to find a solution that will leverage the least amount of your savings while producing the maximum amount of income over your lifetime. The financial advisor you work with should be committed to your financial success and should make you feel comfortable in working with them and that they have your best interests in mind. Leaving your financial advisor should make you feel confident about your financial future.

(For more from this author, see: Could You Afford to Save for a 40-Year Retirement?)

Shanna Tingom is a registered representative, securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Heritage Financial Strategies are not affiliated.