How To Find A Good Financial Advisor

When I signed the documents for my first home there were two real estate agents, one closing agent and a lawyer around a big table.  Yellow arrow stickers pointed out from the pages where my signature was needed.  In fifteen minutes I had signed my name thirty times.  I was the proud owner of a home.

Looking back I was a risky bet for the bank.  22 and just out of school I had lined up a solid job but there were far more questions than anyone wanted to admit.  I didn’t have a professional track record, my income history consisted of spotty cash collections from summers on a golf course, and I had only recently started using a credit card (my only form of credit history).

It turns out I was lucky.  What could have been a personal financial volcano never erupted.  The biggest rumble was when the U.S. economy crashed two years into owning my home.  Good fortune came my way and a man in his mid-thirties bought my place after three months on the market.

When I look back on this part of my life one thing is clear.  I did not take responsibility of my own financial life.  The buck starts and ends with me.

And yet, one thing also stays with me.  Not once during the two month process of buying a home did anyone ask me for a budget of my own finances.  That just feels odd, maybe downright irresponsible.

So what do you do when you need to consider using a financial advisor?  Like me, many people first consider this question in advance of a large purchase or loan.  The process can feel intimidating and many people simply avoid it all together.


Emotionally Coming To Terms With Needing An Advisor 

I remember when I first spoke with family members about speaking to a financial advisor.  The first question in my head was ‘where do I start?’  There are so many advisors out there and it’s unclear which you can trust.

The questions kept rolling in:

‘How do you find a good one?’

‘What is a reasonable amount to expect to pay?’

‘How can I do this without spending my weekends researching?’

What I desperately needed was information I could trust that was easy to access.  It was challenging.  But after a large amount of research and speaking with people in the business I got the answers I was looking for.  I felt the security of financial awareness.

The fears I faced are not uncommon.  As I spoke with more people I found that the fears people experienced fit into three categories:

  1. ‘I Just Don’t Have The Time’ – You are incredibly busy. There is no doubt about that. However invert the question for yourself. What could you earn for your family by undertaking this task? What if you found a way to uncover $10,000 from a new investment strategy or by lowering expenses? Would the time you spend be worth it then? You bet.
  2. ‘If This Other Part Of My Life Would Calm Down I Could Focus On This” – We all have intense lives. The demands on us are measurable. Block out time on your calendar. Start with thirty minutes. Make sure you are alone and have the time to yourself during this window with no interruptions. You will accomplish far more than you think you can.
  3. ‘I Need Help’ – We all need a helping hand to get through difficult times. However we also use this approach to avoid taking action. Don’t get stalled.  You have significant abilities and you’re a go getter.  You’re reading this post! Continue to search for information and strategies that work for you.  You’re on the right track!


3 Golden Rules Of Finding A Financial Advisor

Step #1 – Don’t Work With A Commission Based Advisor – This is the number one mistake most people make. They work with a financial advisor who gets paid when you buy an investment product.  The only way this makes sense is if you’re extremely wealthy (and even then it’s questionable). Most people should first search for a fee only advisor.

Step #2 – Ask A Friend – Finding an advisor you can trust is the ultimate goal. A great way to start that journey is to ask your friends if they’re happy with their financial advisor. Most people will have a mediocre to lukewarm review of their advisor. Stay away. If a friend raves about their financial advisor and has been working with them for years set up an introductory call.

Step #3 – Start With A Fee Only Advisor – A fee only advisor is a financial planner who charges a fee for a service (they don’t touch your retirement assets). This is what you want. It may be a bit more expensive up front but you’ll know the advisor’s incentives are more in line with your goals.

Look at the Garrett Planning Network and the National Association of Personal Financial Advisors for hourly fee only financial advisors.

Bonus!  Ask the financial advisor if they are a fiduciary.  This is a fancy word that says they are legally obligated to put your interests above their own.

Published: April 2, 2015
By: JP Adams

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