6 Ways to Find an Advisor

The professional you pick to manage your assets and advise you on key financial decisions affects your retirement and other major financial goals more, maybe, than even you. Make the right choice.

When trying to find a financial advisor, you may ask your attorney or accountant for a referral. Makes sense, as you trust their advice. Just as important, these professionals cross-pollinate with the advisors of many clients (like Glassman Wealth Services), so often they know a variety of financial planners and who might fit best with you.

Asking people you trust ranks first on my list of six steps to finding the best financial advisor. Your vetting can’t end there, though. Here are five more considerations:

What type of advisor do you want? Are you looking for someone to just manage your investments or do you want more comprehensive financial planning? Some advisors, like our firm, integrate tax, estate and retirement planning into services, as well as investment management.

Look at the website. Ultimately a marketing tool of each firm, a site is also useful to see how well prospective advisors communicate with clients.

Do they use financial jargon or explain financial concepts in plain English? Clearly explain services and how they work with clients? Does the overall presentation on their site stand out in some way?

Consult financial advisor lists. While there is no perfect ranking, advisor lists provide the names of some of the biggest and best advisors in the industry.

AdviceIQ, for example, recommends advisors with pristine regulatory histories. We also recently compiled the “Best of Top Financial Advisor Lists” where we reveal how these lists decide what advisors rise to the top.

Compensation. You need to know how any advisor you might engage makes their money. Does their advice depend on your best interest or on a potentially hefty commission? You may not immediately spot some fees and commissions, so it’s important to ask.

Generally, there are three types of advisors:

  • Fee-only: These fiduciaries don’t earn commissions or other fees on the investments they recommend. Instead they charge an annual fee, typically a percentage of the assets they manage for you, a flat fee for services or sometimes both.
  • Registered representatives: These stockbrokers, investment managers and others can earn commissions on investments or insurance products they recommend. They are not fiduciaries, meaning they only need to recommend investments suitable for you, whereas fiduciaries must act exclusively in your best interest.
  • Independent or dually registered advisors: These advisors can charge a fee for managing assets and make commissions on investment or insurance products they recommend. Ask what commissions they receive and if they rebate back to you the marketing fees (12B-1 fees) they receive from mutual fund companies; some financial advisors don’t always do that.

Meet them. You learn much more about a financial advisor during a meeting. Do they ask questions to better understand what you want from an advisory relationship? Do they follow a pre-determined agenda or presentation or are they interested in knowing what’s important to you?

Come prepared with questions. You might want to know how often the advisor communicates with you and how, as well as how they develop investment strategies or what expertise they have in tax or estate planning. The Securities and Exchange Commission’s advisor questions guide gives more detailed suggestions.

Your choice of a financial advisor affects the quality of your money decisions. Follow my suggestions and carefully vet advisors you consider and I’m confident you can find the best financial advisor for your family.

Follow AdviceIQ on Twitter at @adviceiq.

Barry Glassman, CFP, is the founder and president of Glassman Wealth Services, a fee-only investment management, financial planning and wealth management firm in McLean, Va. He has been honored with just about every Top Financial Advisor Award from the financial planning industry and his peers in publications including Barron’sInvestment News, Reuters, Washingtonian and Virginia Business. Barry provides investment and financial planning commentary on WTOP radio in the Washington, DC area. He is a member of the elite CNBC Financial Advisors Council and contributing writer at CNBC.com, Forbes.com, WTOP.com, Investment News and Financial Planning. Follow Barry on Twitter at @BarryGlassman. His website is www.glassmanwealth.com.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.