Q: I’m thinking about working with a financial advisor. What criteria should I use when selecting a professional?
Hiring a financial advisor seems like it’d be a simple task, but I’m glad you recognize that you should carefully consider the right person to hire. Here are three important characteristics to consider when vetting advisors:
- Look for one with a Certified Financial Planner designation. This means they’ve met rigorous professional standards and adhere to principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients, according to the CFP Board.
- They should be “fee-only” and have that listed on the CFP Board’s website for you to see. Fee-only means “no commissions,” which will help reduce some of the conflicts of interest that can arise when advisors make recommendations for your money.
- They should be willing to sign a fiduciary oath, which establishes that they’ll put your best interests first.
Beyond that, I recommend finding an advisor who focuses on clients like you. If you’re a young professional, for example, you probably shouldn’t be working with an advisor who typically works with clients nearing retirement. That’s like going to a pediatrician for heart surgery. Ask the advisor what percentage of his or her clients are going through similar life situations and have similar needs.
Remember, no single financial advisor can help everyone. So if you speak with someone who says they’re right for you no matter what, that’s your cue to walk away.
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Grow Financial Advisor Panel participants are responsible for the content expressed and do not necessarily represent the views or opinions of Acorns Grow, Inc., Acorns Securities, LLC or Acorns Advisers, LLC. Content is provided on an informational basis and should not be construed as investment advice. Individual circumstances will vary. Please consult a financial advisor before acting on any opinions expressed. Participation in the panel is voluntary. Editing of advisor responses is for brevity and clarity; no editorial privilege is exercised.
November 29, 2016