5 Things to Look For when Hiring a Financial Advisor or Financial Planner
Exhausted trying to find a financial professional you trust? You aren’t alone. Navigating through this complicated world of acronyms and titles seems daunting when all you want to find is someone to help you with your money! Today I will be covering the 5 things you want to look for when hiring an advisor. This will help narrow down your search and find the perfect person for you:
1. Check Their Reputation
When looking for financial advisors or planners, many ask for recommendations from friends and family, and few are aware that you can look up their actual reputation on brokercheck.com. Brokercheck.com is a great tool to see if what your financial adviser is telling you is accurate. It states whether or not they have complaints filed, what licenses they hold, as well as if they have been barred or not. This is a great starting place if you are at the beginning stages of your search. You can look up multiple individuals at one time, and all you need is their name!
2. How Do They Make Money?
All advisers get paid. How you want to pay them may determine who you hire. Some advisors are fee-only, but a majority earn their money based on a percentage of assets you invest called "assets under management." For the most part, planners get paid by a fee, and financial advisors get paid by a percentage.
3. What Do You Need Help With?
The most significant misunderstanding is an individual going to a financial professional not understanding what that financial professional can help with. Financial planners come up with a financial plan for you; however, they are not as concerned with executing that plan nor making sure you have top-notch investments. Financial advisors typically worry only about your investments and are less concerned with your day-to-day finances. The confusing part is many firms have the capacity and capability to do both. Try to nail down what you need help with. Is it understanding money and budgeting? Are you okay with budgeting but have no idea where to begin to invest? Figuring out what you need will help clarify the financial professional that can help you.
4. They Aren't All Made the Same
Financial advisors are not one size fits all. Financial advisors employed by large firms like Merrill Lynch, J.P. Morgan, Bank of America, and Goldman Sachs may need to approach things a certain way set by corporate standards. Financial advisers that are independently registered may have more flexibility in the way they do business but still need to adhere to the firm they clear through. A firm that is an RIA or a registered investment advisor gives the most unbiased advice because they are fully independent. Understand certain advisors' limitations. Some are incentivized to sell their firm's products. Knowing the difference can help you decide who you want to invest with.
5. Do you fit THEIR asset range?
Another unfortunate and complicated thing about finding financial advisors is that they typically operate their business based on net worth. Some work with clients of all asset ranges. Some will only speak to you if you have 6-7 figures or are called a high net worth individual. Other specializes in Ultra High Net Worth Individuals with a net worth of $30 million or more. Not every advisor is fit for you. Some may have an excellent reputation but not work with your demographic. Do your research before you reach out to see if they will work with you.