Finding a Financial Advisor

One of the things I recommended in my post yesterday about International Investments was that you work with a financial advisor. I actually had someone email me a question about how I found my financial advisor (WHOO HOO! A real life reader!!). So - here is what I think you should do to find a financial advisor and what services you should think about asking for when you find one to work with.

The most important thing to look for, in my opinion, when considering a financial advisor is someone that has the Certified Financial Planner (CFP) designation. CFP is your guarantee that the person you're taking advice from SHOULD know what they're talking about. To get CFP designation, you have to sit for an intense examination that includes all types of planning related concepts - investment planning, risk management, insurance planning, tax planning, wills & trusts, education planning, etc. In addition to sitting for the test, CFPs must meet certain education guidelines, must have experience in the financial industry, etc. Basically the point is that it's not easy to get this designation so people that do it have put a lot of time & energy into knowing what they're doing. You can search for CFPs in your area on the CFP Board of Standards website: http://www.cfp.net/search/

Once you've identified some potential candidates, you'll want to reach out to a few, tell them about your situation (where you are financially, what you're looking to do - retirement planning, insurance planning, etc.) and see what kind of response you get. I'll tell you right now that some of these people only work with high net worth individuals - so don't be upset if you get no response or a response indicating that you're not in their 'target client' demographic. When I reached out to folks, I went ahead and included a note saying "if you're not the right person, could you point me in the right direction or recommend someone that would work with someone with my goals & needs". That seemed to work well.

After you get your list of potential candidates, I'd suggest having meetings and/or phone conversations with them. This individual is going to have a major say in what you do financially so you need to 'click' with them and like their personality. You're interviewing them for a job - the job of managing your money - so ask tough questions and get comfortable with them.

Once you've narrowed your list down to someone that meets the CFP requirement, wants to work with you, and has a personality/style that appeals to you, it's time to consider a really big issue - how this person gets compensated. There are several ways that financial advisors make money and some, to me, are more appealing than others. I don't want to work with someone that gets commissions on my invesment moves. That, to me, creates a motivation for the advisor to move in and out of investments frequently to try to ratchet up the commissions and that doesn't appeal to me. I would much prefer to pay for the financial advice in a pay as you go manner or pay a yearly fee for their services. My advisor gets a yearly fee as well as a small percentage based on the total assets he manages for me. That, in my mind, creates a good scenario - he's motivated to make my assets worth more as he gets paid more when that happens.

A good financial advisor will help you get your financial house in order and can do things for you that you either can't or don't have time to do for yourself. Mine has helped me shop for the best life insurance policy/rate, helped me get an education fund started for Bailey, helped me reallocate my assets based on my specific age and risk tolerance, and given me peace of mind that I'm doing the right things financially. I can't recommend this enough - plan today and you'll have a better tomorrow! Good luck!!