Finding someone to take care of your money can be a stressful task. But you want to take the time to make sure you choose the right model. What should you look for when choosing a financial advisor?
Here are some questions to keep in mind as you seek an advisor to continue your retirement planning.
Are they comprehensive planners?
When you first meet with a potential financial advisor, what advice do they offer you? Are they only talking about stocks and bonds? Or do they focus on other aspects of your finances such as Social Security, taxes and estate planning?
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A comprehensive financial planner (opens in new tab) will help you develop a holistic plan that looks at all aspects of your finances and covers your short-term and long-term goals. Advisors who take a holistic approach will take the time to ask you questions about your financial goals, both now and in the future. This can include everything from estate planning to charitable giving. You want an advisor who truly understands your retirement hopes. A holistic plan aims to optimize all aspects of your finances and how they can work together to achieve those goals. This type of planning will bring you much more value and help you navigate complicated financial decisions.
Are they a fiduciary?
Fiduciary (opens in new tab) is legally and ethically bound to make the best decisions for its clients. They will always put your needs first. This may not be the case for many advisors out there. When choosing a financial advisor, you’re looking for someone who can help you manage all of your finances. You want to make sure you can trust them to do it.
A fiduciary cannot recommend anything that does not benefit you. If the recommendation could create a potential conflict of interest for your advisor, as a fiduciary, they must tell you. This could be something as simple as an advisor profiting more from one investment than another. When they are a fiduciary, you know that the recommendations they make to you come from a place of trust, good faith, and legal and ethical duty.
Are they independent advisors?
An independent advisor is paid a flat fee to advise their clients, and they want to provide you with more than a product. This is very different from a commission-based advisor. They make money based on sales for a third party. Be wary of commission advisors. Their recommendations may be based on sales and not on the products or services that are best for you.
Advisors working for larger firms may be allowed to offer only their firm’s specific products or services. Working with an independent advisor leaves you open to many more options for your money.
Are they a good fit for you?
Your values and goals should be aligned with your financial advisor. When you leave the initial meeting, ask yourself if you got anything out of it. Your advisor should be able to simplify complicated financial matters. You might meet someone who checks all your strategy boxes, but if they don’t fit your personality – it’s okay to keep looking. This is an important decision, and you want to make the right one.
Advance your financial future
A recent poll showed that about 38% of Americans (opens in new tab) you currently work with a financial advisor, and advisors are the most trusted place to get financial advice.
Planning your financial future is a process that takes years and you don’t want to make mistakes. Make sure you’re working with the right people who make the best decisions for you and your money.
This article was written by and represents the views of our advisor, not Kiplinger’s editorial team. You can check the advisor’s record with the SEC (opens in new tab) or with FINRA (opens in new tab).
