The When, What, Where and How of Choosing a Financial Advisor

By Al Chingren - March 1, 2018

Relying on an expert to help with financial decisions probably sounds good to most people. The problem is finding that person who understands your needs, and more important, who you can trust. Here are my suggestions for when you should consider an advisor, what to expect, where to start and how to choose one.

When Should You Seek Advice?

One of the most important times to seek advice is when life changes like these occur:

  • Family: Marriage, birth of a child, divorce, re-marriage
  • Occupation: First job, benefit choices, changing jobs, starting a business, nearing or in retirement
  • Health: Long-term care needed, death or illness of a family member, aging parents
  • Money: Receiving an inheritance, planning your legacy, tax changes

What Can I Expect from an Advisor?

While styles may vary, the most important result should be a sound financial plan. At a minimum, advisors should help:

  • Establish your goals. Short-term goals are those you want to accomplish in the next year: build an emergency fund, purchase a new car. Mid-term goals are for the next three to five years: purchase a home. Long-term goals are further out, such as retirement.
  • Understand what kind of investor you are. When you'll need the money for each goal and how you feel about risk.
  • Create, implement and monitor your plan.
    • Create a comprehensive financial plan for your future based on your discussions.
    • Implement your plan and begin your investments.
    • Monitor your investments and recommend changes, if necessary.
  • Regular check-ins. Your advisor should schedule regular meetings and seek you out when significant changes occur in the investing environment.

Where Should I Start?

Finding the right advisor takes homework. Friends and family can make suggestions, but ultimately you need to find a professional who has qualities that make you feel comfortable sharing information about your life and money. We suggest an advisor who:

  1. Works to understand your personal circumstances, values, investing style, tax situation and goals. Responds promptly when you experience a life change. Ask the advisor how he or she will help you set priorities and support your goals.
  2. Is a good fit. Make sure the advisor's expertise matches what you need most. If the advisor works mostly with corporate clients and you aren't one, it might not be a good fit.
  3. Helps you stay focused. It's easy to get sidetracked by market news—good and bad. It's an advisor's job to help you stay resolute on your goals.
  4. Develops and monitors a personal plan for you and adjusts it when needed. Find out how often the advisor makes significant changes with other clients, and how that affects the fees you may pay.
  5. Helps you understand fees and expenses. Fees should be transparent. Walk away if they're not.

How Do I Choose?

Advisors can be affiliated with large or small firms or be independent (run their own advisory business). Both types have advantages, but in the end, it's your comfort level that matters. Review the advisor's qualifications with these questions:

  • How long have you been in the industry?
  • Do you have a succession plan? What happens to my money if something happens to you?
  • Do you work in teams or on your own?
  • What's the average length of time a client stays with you?

The Bottom Line

Making the decision to work with a financial partner is significant. Finding the right one is even more important. If you have an advisor, we suggest you talk about any questions this article may have sparked.

Al Chingren
Al Chingren

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