In a recent survey, more than 17% of Americans said they lost $2500 or more last year due to a lack of financial literacy, and almost twice that many reported losing around $500.
Why aren’t more people taking advantage of financial advisors to help them manage their money? Maybe you want help with your financial planning, but don’t know how to choose the right advisor.
The process doesn’t need to be daunting. An afternoon on the internet will get you off to a good start, and you can do the rest in person or on the phone.
Define Your Needs
The first step is to specify the type of advice you’re seeking.
- Specific topics: Some advisors are specialists in areas like taxes, stocks, or insurance.
- Comprehensive financial planning: A financial planner can help you with college or retirement plans, for instance, using a variety of investment tools.
- Wealth management: An advisor who specializes in wealth management can create a wide-ranging financial plan for you, covering topics like tax and estate planning, real estate acquisition, and risk management.
If you have friends or family whose opinions you trust, ask them if they can recommend anyone. Your accountant or attorney might also be able to make recommendations.
You can also check these financial planner association databases for candidates near you:
- NAPFA (The National Association of Personal Financial Advisors)
- Garrett Planning Network
- XY Planning Network
- ACP (Alliance of Comprehensive Planners)
Of course, you can also search for local advisors online. Use Google search or check review sites like Yelp.
Do a Little Research
Check with the Better Business Bureau for complaints. Not all complaints are reasonable, so simply finding a complaint shouldn’t rule someone out — but a pattern of complaints is a red flag.
Read reviews wherever you can find them: Yelp, Google, Wallethub, and Trustpilot are good places to check.
Check each company’s website and social media to get a feel for their specialties, approaches, and styles.
Interview Your Potential Financial Advisors
Schedule a phone call or meeting with the advisors you’re interested in. You’ll get a chance to see how well your personalities click while you learn more about them. Here are some questions to ask:
What is the scope of your service? What are your specialties?
If you’ve done your homework and you know what you’re looking for, it will be easy to see if an advisor is a good match for you or not.
How are you paid?
Some advisors, like stockbrokers and life insurance representatives, offer advice but are paid primarily through commissions.
Some investment advisors are paid a percentage of your assets, which means it’s in their best interest to make sure your portfolio grows every year.
Comprehensive planners will usually charge a flat or hourly rate. It may not be cheap, but it should be transparent and clearly communicated.
Are you held to a fiduciary standard?
The fiduciary standard forbids an advisor to give advice that doesn’t benefit their client. Many people mistakenly believe that all advisors are legally obligated to consider their client’s needs first, but that’s not always true. In many cases, it’s perfectly legal for a broker or insurance agent to give “advice” based on commissions and other incentives.
CPAs and registered investment advisors are held to a fiduciary standard, but most stockbrokers and insurance agents are not.
How have you helped clients in the past?
Your advisor should be able to clearly articulate what they’ve been able to accomplish on behalf of their clients.
A Long-Term Collaboration
Once you define exactly what your needs are, locating a few planners who specialize in the right services will be fairly simple. After an afternoon of online background checking, you should have a shortlist of just a few professionals to speak with. Those conversations should lead you into a long-term collaboration with the right financial advisor for you.
If you are looking for a financial advisor in the Las Vegas area, we would love to meet with you. We are currently accepting new clients, so contact us today to get started!