Choosing which financial advisor to work with is an important and challenging decision, and there are many different factors to consider. Making the right choice could have a significant impact on your ability to meet your financial goals. Here are some of the questions you may want to consider while making your decision:

Does this financial advisor work with clients like me?

Many financial advisors have specific types of clients that they regularly work with. After all, it’s impossible for any one person to have the solutions for every single financial problem that any type of client might ever come across! Comprehensive financial planners work across a wide range of subject areas including investing, taxes, insurance, estate planning, cash flow management, retirement planning, employee benefits, and many more. Each one of these areas are an entire career field in and of themselves. Because of this, many financial planners find themselves seeking to serve specific groups in order to provide the best possible advice because of their familiarity with the needs of those clients.

Here are some of the ways that financial advisors might define the types of clients that they work with:

  • By profession, such as working with physicians or active duty military personnel. People in the same profession often come across similar financial issues.
  • By life stage, such as those approaching retirement within the next few years or those who are just starting their careers.
  • By specific events that clients may want financial advice about, such as going through a divorce or starting up a business.
  • By employer, especially if you work for a large company with a particularly complex employee benefits system
  • By net worth or income, since wealthier clients have different concerns around issues like estate planning or taxation than clients of more modest means
  • By geographic area, because some clients prefer to meet face to face with someone who knows their local area

In a perfect world, you might be able to find a financial planner who overlaps with you on all of those categories! If an advisor has extensive experience in working with clients who are just like you, it’s more likely that they’ll be able to provide effective advice and answer all of your questions.

Are they qualified to give me financial advice?

It is critically important that your financial planner have the technical expertise to provide you with competent and professional advice. If you don’t have confidence in their recommendations, then you’re less likely to take action to improve your finances. As a measure of their level of expertise, you can consider elements such as their education, professional designations that they may have earned, and their level of experience.

You may also want to review the advisor’s FINRA BrokerCheck profile to ensure that they are properly registered and don’t have derogatory marks in their history.

How do I know that a financial planner is acting in my best interest?

Unfortunately, a substantial majority of the financial advice industry still operates on a commission model that provides advisors higher compensation for making recommendations to buy specific investment or insurance products. This represents a massive conflict of interest, and may reduce your confidence that they’re acting in your best interest rather than their own. When selecting a financial advisor to work with, look for signs that they do everything possible to put clients before themselves.

First, ask if they are subject to a fiduciary standard at all times. Being a fiduciary means that they have both an ethical and legal obligation to always put the best interests of their clients before themselves. It seems obvious to most people that advisors should be required to put their clients first, but that is unfortunately not the current landscape that consumers face. Most financial advisors are subject to a lower standard called “suitability”, and there are others who are only required to act as a fiduciary for certain aspects of their relationship with clients. Ask if they are willing to sign a fiduciary oath, or if they are members of organizations that require strict adherence to a fiduciary oath.

Second, ask if they are fee-only. Being a fee-only financial planner means that they are compensated solely by their clients, and not through commissions from financial products that they recommend. Be aware that if someone says they are “fee-based”, that means they receive both fees and commissions.

Pro tip: This is one of the advantages of working with an SDFAN advisor!

What does their financial planning process look like?

Every financial planner has their own approach to serving clients. They’ll use different tools and technology, follow different steps throughout their process, have different forms for deliverables for their clients, or use a different frequency for review meetings. They may also dive more or less into various subject areas for their clients. You’ll have to ask your potential advisor about the process that they use, and make sure that you’re comfortable with it.

Am I comfortable sharing personal financial details with this advisor?

This could mean different things for different clients. Dissecting your entire life and financial situation can be quite uncomfortable for some people, so think about whether you’re ok with this individual advisor. Consider their trustworthiness, efforts to maintain security over your confidential financial data, and how well their personality meshes with yours. You may be spending lots of time with them and they’ll have a big impact on your future, so work with somebody who helps you to feel comfortable on all of these fronts.

If you’re ready to find the right financial advisor for you, head over to our advisors page to get started on your search.