• Question
  • Things to consider when hiring a financial advisor

    Asked by a 71 year old man from Rochester, NY on 7/9/2006

    Here are some things to keep in mind when choosing a financial advisor:

    1) Go with a fee only advisor, since you want to avoid conflict of interest issues. Fees can be hourly, a percentage of your portfolio's value or an annual retainer.
    - Some advisers get commissions on the investments they sell. This gives them an incentive to have their clients trade and buy high-commission products.

    2) Choose an advisor with the right certification - one who is at least a certified financial planner, or CFP. Even better would be someone who has qualified to be a chartered financial consultant, chartered financial analyst or certified public accountant-personal financial specialist.

    Today anyone in the US can call themselves a financial planner, no certification is required - so you should look for someone qualified.

    3) Find an advisor who will uphold the standard of acting as your fiduciary, meaning they will recommend products that are *best* for their client (you). At some large firms fee-based advisers often aren't considered fiduciaries, instead a lower "suitability" standard is used, which means they can recommend products that are only a "reasonable" option for their clients.

    4) Look for an advisor that takes a holistic look at your situation - beyond picking investments like stocks, funds and bonds you may also want someone who can help with insurance, mortgage, taxes, college costs and retirement & estate planning.

    5) Make sure that you get the right value for the fees you are paying - many advisers charge 1% of a portfolio's value each year. With fees also charged by the products you buy - you might be paying up to 2-3% a year, so your annual return could go from 7% (average S&P return) to 5%...quite a hit and you might be able to make that just by putting your money into safe fixed income investments yourself.

  • Categories: Financial Advisors, Retirement Planning, Retirement Investing, Estate Planning


  • Steve 


    San Francisco, CA

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  • Thanks for the explanation of what you are looking for - you can find some options here: http://www.newretirement.com/financial-advisor-marketplace.aspx

  • Login to rate this answer:   Answered on 6/29/2012
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.