How To Find A Financial Professional Who Fits Your Needs

Finding the right professional to help manage your money is one of the biggest decisions you’ll make. On my radio show, Money Matters, I recently received a call that gets to the crux of how to make this critical choice.

Our caller, “Paul,” said that he had worked with a handful of advisors at big-name firms. Unfortunately, none of these professionals ever earned his trust. And trust, Paul understood, is a critical ingredient of a successful relationship between a financial advisor and their client.

Paul felt adrift in his search for someone new to help him grow his investments. I’m sure he’s not alone.

So, here are some of my thoughts on how to find help that might align with your interests – and with you as a person.

The first thing to look for is someone who is fee-only. Fee-only financial planners are registered investment advisors with a fiduciary duty to their clients. They do not take any fees or compensation based on product sales, and therefore have fewer inherent conflicts of interest and, generally speaking, can provide their clients with more comprehensive advice. In this way, they operate under different (often more stringent) guidelines than their commission-based agent and broker counterparts.

I don’t want to throw big-name financial management companies under the bus because there are good folks at these firms. But many of these companies aren’t fee-only, or only offer some programs that are fee-only. Being “fee-only” means that that’s the only thing you do. If you take commissions, takes fees on annuities, and in other areas to make money for the brokerage firm itself, that is not fee-only.

Back to that term “fiduciary”….

The second thing is you want to find someone who has a fiduciary duty to act in your best interest. A fiduciary is a professional (such as a financial planner) or legal entity (such as a brokerage firm) that has the legal authority and responsibility to act for you in situations requiring total trust, good faith, and honesty. With great power comes great responsibility – by law fiduciaries must act and invest in your best interest, not in their own.

Many big-name firms on Wall Street have shareholders. Now, this doesn’t mean they don’t put you first, but it can, in my opinion, create an inherent conflict. If the firm is publically traded, it certainly wants to maximize profits for shareholders. In many cases, these companies adhere to the principle of prudent investing – which means that the practices are good for you and for the firm. This is not typically as client-friendly as the fiduciary standard, so my advice is to work with a fiduciary.

The third thing to consider is that advice isn’t free, but it shouldn’t cost you an arm and a leg. Look to pay annual fees of 1% a year or less. There are some programs out there that will charge you 1%, but when you add in some mutual fund fees or other costs, you’re up around 2%. You want to keep your investment costs as low as possible.

Look also for a multi-disciplinary outfit. If a firm offers help with taxes, health care, estate planning or elder care planning, it can serve as a one-stop shop for various components of the retirement planning equation. The company doesn’t have to provide all of these services in-house. It might instead have relationships with a Certified Public Accountant (CPA) and an estate planning attorney whom the financial planning firm trusts to handle its client’s needs.

Finally, recognize that building relationships takes time, and some years will be better than others.

Take some time, meet with a variety of professionals, do your research, and then see who feels like a good fit – for your portfolio and your personality. As with any relationship, it will take time for you and your advisor to get to know one another, so let it breathe. But, if someone instantly rubs you the wrong way, it may be a good idea to trust your gut and look elsewhere for help.

Keep your expectations reasonable. Make sure that you don’t go into the relationship expecting to make money right away. Rome wasn’t built in a day, and neither are retirement nest eggs. Some years will be fatter than others. Think back to the crisis of 2008 and 2009. During those times, an advisor’s role was to help lead clients through the darkness. That’s part of the deal, too.

Keep all of these points while searching for an advisor. They are key to creating a lasting relationship with the right financial professional.

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