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How the wealthy shop for a financial advisor

Author: Phillip Christenson
by Phillip Christenson
Posted: Feb 14, 2019

At some point, maybe now, you will consider whether or not you need the help of a financial advisor. It’s probably because you either don’t have the time, knowledge, or desire to manage and monitor your investments by yourself, let alone create and follow through on a comprehensive financial plan. No matter your reason finding the right financial advisor is a big decision that needs to be considered carefully. See Prviate Wealth Management Plymouth MN.

First step, don’t rush into it and hire the first advisor you meet with. Use this post as a guide for things you should be looking out for and questions you should ask. I’ve tried to lay out the most important topics related to choosing the right financial advisor for you. If you are already working with an advisor you might find this article useful in evaluating your current advisor to make sure he or she is the right fit.

Background and Experience

When hiring any professional you need to at least make sure they have relevant experience, education, and whatever credentials are valuable in their industry. In the case of financial planning you should see where they went to college and what they studied. One very well-known financial planning company is notorious for hiring career changers with no real finance background, they especially like it if you have a background in sales. At the very least make sure they studied a relevant field like economics, finance, or even accounting.

A relevant college education should be a minimum. Has the financial planner shown the desire to continue learning and increasing his knowledge base. Credentials such as a CFA (Chartered Financial Analyst), CFP (Certified Financial Planner), and CPA (Certified Public Accountant) not only show an ability to study and learn advanced topics but because these designation require continuing education to maintain active status you can be assured they are staying up to date on changes in the industry.

Keep in mind just because an advisor has a lot of letters after his name does not make him or her qualified. There are a lot of designations and certifications now-a-days, and not all of them have the same importance. Make sure you understand what a designation means. Did it require classes, many hours of self-study, comprehensive testing?

Investment Philosophy

Does your financial advisor have an actual investment philosophy or are they just trying to pick the best stocks, sectors, and mutual funds. Having an evidence-based, consistent investment philosophy is going to give you the best chance of achieving your goals. Make sure you ask your investment advisor about his or her investment philosophy. If they can’t explain it, dodge the question, or their answer isn’t to your liking you should probably pass. Remember, not all financial advisors are experts when it comes to investments. In fact, many advisor just farm out the investment part of their practice to a TAMP or Turnkey Asset Management Program. This means your advisor isn’t the one actually managing your investments but instead hires a third party to manage your portfolio on your behalf. This can create problems because a real comprehensive financial plan and investment portfolio should be closely aligned which is difficult to achieve if the same company isn’t handling both.

Are you Comfortable?

This is more subjective. It’s the feeling you get when meeting with an advisor. Are you uncomfortable because they are trying to sell you products that you don’t really understand? Or are they asking for the names of your close friends and family so they can prospect for more client? Make sure you feel comfortable with the person because you could be working with them for years. If you don’t understand something, ask. If the answer isn’t satisfactory move on.

Fiduciary Financial Advisor. What’s that?

Only 15% of all financial advisors are held to a fiduciary standard. A fiduciary is someone that, by law, has to do what is in your best interests as the client. This means your interests are more important than the advisors, as they should be. If a financial advisor is not a fiduciary they don’t have to do what’s best for you, they can, instead, do what’s best for themselves and the company they work this. This leads to advice and products that may not be right for you and your family. Ask if your potential advisor is a fiduciary, if not you need to seriously consider moving on.

Clean Record

At the very least check to make sure your future financial advisor has a clean record. This is public information and can easily be found online by going to This is a government entity that regulates financial advisors. You will be able to see if your potential advisor has been subject to any regulatory actions in the past.

If you haven’t already, check out some of my earlier posts which should help in your decision of choosing a financial advisor.

Financial Advisor Checklist

Fiduciary Standard - Why it's important

How your Financial Advisor gets Paid is Important

If you actively searching for a financial advisor right now I urge you to read more About Me and see if I might be able to help.

About the Author

Phillip James Private Client Services provides financial planning for wealthy individuals and families.

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Author: Phillip Christenson

Phillip Christenson

Member since: Feb 11, 2019
Published articles: 1

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