A good financial advisor is hard to find. As with other service professionals like doctors and lawyers, a professional degree alone doesn’t cut it; you need someone trustworthy, honest, knowledgeable, and caring. Here are the ten traits to look for when searching for a financial professional.
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Education is key
Look for the certification C-suite: ChFC, CLU, CPA, and/or CFP. While some advisors may string an alphabet soup of impressive-sounding credentials after their names, these four designations have the most rigorous courses of study. Make sure you don’t settle for less.
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Verifiable credentials
Financial advisor fraud is becoming more common, with an increasing number of scammers claiming accreditations they don’t actually hold. Always make sure to check the validity of your potential advisor’s certifications through an online database like the Federal Securities and Exchange Commission’s Investment Advisor Public Disclosure.
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A clean criminal background
According to the National Bureau of Economic Research’s 2017 study of financial advisor misconduct, financial advisors who have one citation for misconduct are five times more likely to engage in a new violation than average. Use FINRA’s Broker Check to make sure the advisor’s record is clean.
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Relationship-focused
Do they care about your financial goals? Will they take the time to get to know you personally? A good financial advisor listens, understands, and helps you.
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They speak your language—not financialese
Insurance contracts and investment products often contain specialized language that can be confusing to people who work outside the financial industry. Part of a financial advisor’s job is bridging this comprehension gap so that clients feel empowered to make their own financial choices. Pick an advisor who will explain investment decisions in ways that are clear and easy for you to understand.
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Fiduciary standard = Gold standard
Every financial decision your advisor makes while managing your assets should be in your best interest, not just “suitable” for your portfolio. Select a financial advisor who upholds a fiduciary standard.
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Nothing like a human touch
If you have less than $25,000 in assets, a robo-advisor may be the way to go. But if you’re approaching retirement, you likely fall in the $25,000-$250,000+ range, in which case, you’ll want to trust your savings to someone more complex than a computer algorithm.
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They don’t claim to be psychic
The market can be highly unpredictable and react dramatically to unforeseeable events like terrorist attacks and wars. A good advisor knows this, and won’t try to sell you on their ability to see the future.
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Risk is discussed openly and honestly
The amount of risk you can tolerate in a portfolio or an insurance product depends upon a complex interplay of variables including your age, personality, comfort-level, assets, and post-retirement plans. Good financial advisors tailor their suggestions to fit your investing style and specific financial needs. They will not pressure you to make an investment or buy a product that exceeds your tolerance for risk.
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They come highly recommended
In EY’s 2014 Wealth Management Survey, fifty-five percent of baby boomer participants indicated that they chose their financial advisor because of a personal referral. Ask your friends and family if they have worked with a financial advisor and if they would recommend them. Also make sure to check out an advisor’s reviews on Google, Yelp, and Facebook. However, it’s important to remember that these reviews can be purchased or faked by the advisor or their competition to make them look better—or worse—than they are. To avoid this, take advantage of free consultation specials and meet the advisor for yourself.
Sara McKinney
saractag@gmail.com
Sara is a recent graduate of Kalamazoo College and a new addition to the Cowen Team. Her responsibilities include IT support, event planning, and general administrative assistance.
