How do I know who can get me to retirement?


“An investment in knowledge pays the best interest.” -Benjamin Franklin

There are a myriad of financial advisors with shingles out in every community and choosing the right one can be overwhelming.

In some ways, it’s almost akin to walking down the cereal aisle at your local grocery store: So many choices, but they all look so good. The brightly colored boxes quickly grab your attention, and the boxes on sale are particularly tempting. Maybe you even have a coupon for one. But, as a smart shopper, before you get caught up in the clever names, flashy claims or discount prices, you take a moment to think about what it is you really want, really need and what is the best value.

At least this same amount of care should be taken when choosing a financial advisor. You probably already have dreams about how you will spend your retirement, but do you have a plan to realize those dreams? If the answer is no, do you also need help developing that plan and making sure you stick to it?

Who will help you? Financial advisors don’t have a list of ingredients or nutrition facts printed on them. Or do they? If you know what to look for in a financial advisor and/or financial planner, you can find someone to capably help get you (and keep you!) on the path toward realizing your dreams.

Qualifications of financial professionals vary, but there are certifying entities with substantive and ethical oversight that help good advisors become even better by meeting and maintaining high standards and credentials. The Certified Financial Planner Board of Standards is just one. But even if the professional’s name is followed by a bunch of letters, it is still wise to ask some questions.

What are the potential planner’s qualifications? Did the planner attend college and study finance? Does the planner belong to professional organizations or continue to educate herself on investing and the market? How long has the professional been offering this service? Has the planner ever been cited by a regulatory agency for misconduct? It’s not necessarily fun to ask these questions of someone, but it’s also no fun to lose your hard-earned money.

How will you pay your financial advisor? To answer this question, you must understand the differences among fee-only, commission and fee-based (which is a combination of the first two) advisors. Essentially, a fee-only advisor is paid only by you — the client — so there is no conflict of interest. Advisors can also get paid by the companies whose products they sell. The major difference between fee-only and the other two is that with a fee-only advisor, you are paying your advisor, whereas with commission and fee-based arrangements, a company that may not have your interests as a priority is paying the advisor either a transaction fee (commission) or a fee for selling that company’s product offerings.

What services does your potential advisor offer at his or her firm? Can this person help you determine how to pay for your children’s college educations, manage your cash or navigate the various tax ramifications of what you do with your money? How often will you meet with the advisor?

Probably the biggest question to ask anyone you are about to entrust your financial plan to is, will this person act as a fiduciary to you by making your best interests his or her highest priority?

Once you have the answers to these questions from a handful of potential financial advisors, you should be able to make an informed decision. If you are shopping for a financial advisor and would like a sample questionnaire to help you make a choice, we've created one you can download here. If you are headed to the grocery store, get the oatmeal instead of the frooty loops.

Facebook Comments