By Brittany Goodwillie, CFP®
Finances are complex. Trying to navigate the right actions to take can be difficult when there is contradictory advice everywhere you turn. Searching for the right financial advisor to help can be just as overwhelming. You may have a general idea of what you should be looking for, but may not entirely understand why or how to find the right person for you. As a starting point, here are 3 tips to narrowing your search for a financial advisor.
1. Your financial advisor should be educated and experienced.
Unfortunately, just about anyone can call themselves a ‘Financial Advisor.’ Because of that, you need to do a little extra research. Your financial advisor can claim to be educated and experienced but the best way to know is to make sure they have a designation that requires them to be.
Choose a CFP® professional.
CFP® professionals must have at least three years of relevant work experience and have to pass a six hour exam before they can receive the designation. Individuals who hold the CERTIFIED FINANCIAL PLANNER™ certification have extensive training in many areas of finance and are held to extremely high ethical and educational standards. There are other designations individuals can obtain for financial planning, but many of them don’t require any experience or examinations. If the advisor you are looking to work with isn’t a CFP® professional, you should keep looking. Visit the CFP Board’s website to learn more about why you should consider choosing a CFP® professional.
Work with a portfolio manager who has earned the CFA®designation.
If your financial advisor is also managing your investments, you should look for a firm with a CFA charterholder. The Chartered Financial Analyst® (CFA) designation is the credential most rigorously focused on investment knowledge. To become a CFA charterholder, one must pass a series of three six-hour examinations and have a minimum of four years of qualified experience. You want to be sure that the person managing all of your money is educated. You should be able to trust that a CFA charterholder has the necessary knowledge to invest your assets appropriately. Ask your financial advisor if there is a dedicated CFA charterholder managing your assets.
Anyone can claim to be knowledgeable and experienced. Why not find professionals with designations that require education and experience so that you can know for sure? You can use a member directory to look up both CFP® professionals and CFA charterholders directly with the institutions online to confirm that your advisor holds the designation(s).
2. Your financial advisor should have your best interests in mind.
Everyone will claim to have your best interests in mind. To ensure your advisor is leading you to make the best decisions for you, make sure that they don’t have any incentive to lead you in a direction that may not be in your best interest. One way to do this is to work with someone who is not being compensated or encouraged to steer you toward one type of product or investment over another.
Work with a fee-only (not just fee-based), independent advisor.
Fee-only means that the only fee that the advisor is receiving comes solely from you directly. An independent advisory firm is one that works directly for clients and isn’t being compensated by a larger company instructing them what to sell. Why is this so important? Financial advisors that make money off of commissions may not have your best interests in mind, even if they don’t realize it. Imagine that you work for a shoe company; let’s call it XYZ Shoes. You learn how XYZ shoes are the best in the world. You spend all day in training sessions learning about how the shoes are the most comfortable, last the longest, and look the best. When you sell XYZ shoes, you convince customers that they are the best, and you may even believe they are the best. That’s how it can be for a financial advisor working at a big company and selling you a particular product - whether it is an annuity, insurance, or investment. That person may believe they have your best interests in mind, but may have limited experience and education. They are doing you a disservice because just like the same shoe may not actually be the best option for everyone, the same financial products are not always best for everyone. When you work with an independent advisory firm, the advisor should have a broad knowledge of a large number of products and not be blinded by his or her intimate knowledge of one particular product. Your advisor should first and foremost understand your needs, and then advise on the best solutions for you particularly. Beware of an advisor who starts with the solution before understanding anything about you.
You can search for fee-only advisors in your area through The National Association of Personal Financial Advisors and XY Planning Network.
3. Your financial advisor’s model should align with your goals.
You can find a financial advisor for just about anything you are looking for. The first step is to ask yourself what you want help with and what you are looking to accomplish in working with an advisor.
Do you have the time and ability to do everything yourself and only want someone to quickly review what you are doing to tell you that you’re on track? An hourly advisor may be best for you.
Do you want to manage your own investments but want someone to help you with just financial planning issues? An advisor who doesn’t manage assets may be best for you.
Are you looking for a full-service financial advisor to organize your financial goals, put a plan in place, manage your investment assets, coordinate tax planning, and keep you on track along the way? A full-service financial advisor, like Autumn Financial Advisors, LLC, with both an advisor and portfolio manager on their team may be best for you.
As a final tip, no one can safely make any guarantees about the market or anything else. If the advisor you are looking to work with is promising that they will beat the market or claiming that they can predict the future, RUN! Your financial advisor should be giving you advice about a range of issues and helping you to achieve your goals, not trying to sell you products and make guarantees.
It can be easy to put off financial planning. The sooner you get started, the sooner you can be on track for achieving your financial goals. Find an advisor that will offer a free introductory meeting so that you can make sure you feel comfortable working with them.
Autumn Financial Advisors, LLC is a fee-only, full-service financial planning firm. We have a dedicated CFP® professional and CFA® charterholder on our team. We will partner with you to educate you and help you make informative decisions and prioritize your goals. As one of our clients, you can personally call about anything and if we don’t know the answer, we’ll help you find it.
I’d love to meet with you to see if our firm is the right fit for you. No pressure, just a conversation to help you start the journey of navigating the financial complexities in your life. You can email me at email@example.com to set up a time to talk or call me directly at (248) 716-8307.