One of the most important professionals that many of my clients work with is their financial advisor. When we are putting together an estate plan, they help ensure that the entire financial picture is being planned for. If I am working with a business, the financial advisor plays a key planning role for day-to-day operations and the long-term planning for the business. Along with an accountant, a financial advisor is an important part of any team. When I meet with clients who don’t have a financial advisor, one of their first questions is always:
How Do I Choose A Financial Advisor?
Websites for Research
This week, the Wall Street Journal published the results of their investigation into LetsMakeaPlan.org, a directory website for Certified Financial Planners. The Certified Financial Planner Board of Standards Inc. operates the website and boasts of its high standards. If you’ve watched tv recently (or seen ads pop up when you are browsing), you’ve probably seen ads for the website. The CFP Board has spent a significant amount of time and money on the ad campaign. It is designed to inform the general public about the financial advisor directory.
But the Wall Street Journal found that some significant information was not found on the website. Some “have had customer complaints or faced criminal or regulatory problems – often directly related to their work with clients.” The directory only includes two types of “red flags” for planners: CFP Board discipline or bankruptcy. But the board is dependent on the planners to self-disclose these types of indiscretions. (Because of the Journal’s investigation, the board will look at FINRA and SEC records in the future…)
So How Do I Choose?
If the main advertised directory has some issues, how can you choose a financial advisor? You can still use the directory, but you just need to be sure to do your research as well. There are plenty of other questions you can ask a financial advisor before you hire them. Does your friend or a family member have a financial advisor they like? And that is someone they actually respect, not just someone they go to because their parents went to that person for years and it is what they “should” do?
My advice is similar to my advice when you are hiring an attorney, accountant or other professionals:
Make Sure Your Personalities Are A Good Fit
If you’re very tech-oriented, you may not want someone who refuses to use email. Many clients prefer to sit down with their financial advisor to talk about their plans. Finding someone who is local to you and can easily meet with you is probably an important factor. Don’t underestimate other areas of personality that may also help you have a better working relationship. My accountant and I share a very similar dry sense of humor and sarcasm, so our meetings are pleasant. The financial advisors that I recommend to my clients tend to have similar personalities to me as well. So if you and I work well together, chances are you’ll get along with those advisors too.
What If They Aren’t A Good Fit?
At the same time, I often find that some prospective clients won’t be a good fit to work with me. It’s not personal. But if you can tell from the outset that you aren’t a good fit, then chances are the passage of time won’t improve things. Don’t feel pressured into signing up with a financial advisor who you don’t feel you’ll get along with. It’s your money – you can choose who should manage it.