How Do I Find a Trustworthy Financial Advisor?

You work hard for your money and if you’re on the journey of multiplying your wealth for a sustainable financial future, having a solid coach in your corner can make all the difference. If you want to pay someone to manage your money, you want to find a financial advisor you can trust. 

Sometimes the hardest part is knowing where to begin. At Rosevest Financial we care about your financial journey. Here are six key things to help you find a trustworthy financial advisor. 

1. Define Your Goals to Narrow Your Choices

There are hundreds of thousands of financial advisors and not all of them are the same. Many specialize in different niches of financial planning; from retirement to life insurance policies, debt, real estate, student loans, planning for your child’s financial future and the list goes on. 

First, define your goals, and why you need a financial advisor to achieve them? Then, narrow your search to those that can tell it like it is and focus on your needs. 

2. Ask for References  

Word of mouth is a top influential factor in making decisions. If you’re like most people, you value the opinions and advice from those you trust. Start with your inner circle and ask family members, friends and co-workers whose opinions you value if they have any referrals. Also, if you already work with an attorney or a CPA, they may know someone to connect you with. 

3. Look for Financial Advisors Online

Do an online search and narrow down your choices to a handful of financial advisors you plan to reach out to. The Garrett Planning Network and the National Association of Personal Financial Advisors (NAPFA) are two good places to start. One you’ve decided on the advisors you want to reach out to, look for them on the Financial Industry Regulatory Authority (FINRA) website. FINRA provides a free tool called BrokerCheck that shows employment history, certifications, licenses, and any violations that may have occurred.

When you reach out, ask the financial advisor(s) for an informational interview. Write a list of questions to ask so you understand the services they provide, the kinds of clients they work with, how they’re compensated for their services and if they’re a fiduciary – that’s important and we’ll cover that below. Also ask them about their background, experience and certifications. 

Why it’s Important to Work with a Fiduciary

The law requires fiduciary financial advisors to put your best interests ahead of theirs when managing your money. 

It’s important to know that anyone can call themselves a financial advisor but many are not fiduciaries – which is why it’s crucial to ask. 

Fiduciary advisors must follow five core principles:

  1. Put the client’s best interests first;
  2. Act with prudence; that is, with the skill, care, diligence and good judgment of a professional; 
  3. Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
  4. Avoid conflicts of interest; and
  5. Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.

How Much Can I Expect to Pay a Financial Advisor? 

What you pay a financial advisor ultimately depends on the types of assets they’re managing on your behalf. Ensure you ask your advisor upfront how they collect fees. Advisors typically charge in one of three ways:

  • Fee-only advisors will charge either an hourly or a per project fee depending on your needs.
  • Annual fee advisors will charge a flat percentage fee, such as one percent for the total amount of assets managed over a 12-month period. 
  • Commission-based advisors collect commissions from the investments they sell you. A critical point to keep in mind is there can be conflicts of interest since some commission-based advisors are not fiduciaries and have no legal obligation to you. That means an advisor may sell you a product even if it’s not in your best interest. 

How Often Should I Expect to Hear from a Financial Advisor?

The cadence of communication depends on your portfolio. Make sure your advisor is clear on how often they’ll communicate with you about updates with your investments. A good advisor will ensure to put time on your calendar for quarterly check-ins and an in-depth yearly portfolio performance review. This will help you stay ahead of risks and to keep your investments diversified and growing. 

The bottom line is, when working with a financial advisor you want to feel confident in your relationship and that your portfolio is cared for as if it were their own. A trustworthy financial advisor will reflect this feeling in every interaction with you from your first email correspondence or phone call, all the way down the line. 

If you have questions about what to look for in a financial advisor or are interested in learning more about our services and what we can do for you, engage with us to start the conversation.