For many people, the decision to DIY their own investments versus working with a financial advisor can be tough. They may have spoken with their parents’ advisor or a work-provided professional about some financial priorities, but those seeking their own planner often aren’t sure how to find one.
That said, about four in 10 people currently work with a financial advisor according to a recent survey, and 41% feel that financial advisors have become more important in the last five years.
While you shouldn’t just pick the first financial advisor you find in a Google search, finding and vetting the right planner doesn’t have to be complicated. Here are some strategies to help you find a great match:
Where should you start?
One of the best ways to make your list is to ask friends, family and even co-workers for advisor recommendations. Find out if they’ve worked with someone they liked and what they liked about them. It’s also helpful if the person recommending their financial advisor is in a similar situation to yours—for instance, an officemate of about the same age or a close friend might be more likely to have similar priorities to yours, versus your manager or an older colleague.
You can also search for qualified financial advisors in your area online, through the Financial Planning Association at plannersearch.org or the National Association of Personal Financial Advisors at napfa.org. You can find Fifth Third advisors online as well.
To find a professional who requires no minimum level of assets, you can search the XY Planning Networkor the Garrett Planning Network. Experts commonly recommend finding a Certified Financial Planner, or CFP—a designation that requires specific education and experience, plus passing a rigorous exam.
What kind of help do you need?
Are you looking for a one-time consultation for a specific situation, such as getting married or buying a house? Or are you looking for someone with a specialty in taxes or estate planning?
Are you seeking an all-in financial plan in which an advisor looks at your whole situation, from retirement to debt to insurance and savings or are you looking for an ongoing relationship in which a planner will help you manage what you’ve got?
Your situation will dictate how much time you’ll need to spend with a financial professional, which will also help you determine what kind of fee structure you’re seeking.
How will you pay?
There are a few ways that planners charge for what they do. Some planners charge an hourly fee or a project fee, which can be helpful if you’re working with fewer assets or if you’re looking for a one-time checkup. Others charge a percentage of your portfolio annually, such as 1%.
Some charge a fee that’s a combination of both methods, and some require a minimum amount of assets before they’ll take your business (such as $50,000 or $100,000). Make sure you understand how much you’ll pay for services.
It’s a good idea to meet (or at least speak) with two to three financial planners to determine if they’re a good fit for you. Many planners will offer an early consultation free of charge. You can take your tax documents and any investment information you have, as well as some idea of your financial objectives. Make sure you ask questions such as the following:
- What will my total costs be each year? (One study found that 1% in fees could cost Millennials $590,000 in savings over 40 years.)
- What’s included in those costs? (Are you looking for someone who will help you with taxes and retirement, or just your investment portfolio?)
- How are you compensated?
- Are you a fiduciary?
- Will you be the only advisor working with me?
- What is your usual client like?
- How many new clients do you take each year? (You don’t want someone who’s too overwhelmed to pay attention to your portfolio.)
- How do you prefer to be contacted? (Can you email them? Text them?)
- How often will we communicate? And how? (Regular meetings? Will you make an appointment? Can you call?)
- What’s your investment philosophy?
- How will you assess my investment performance?
- Can you tell me why your last client left you?
With the right preparation and research, you can find a financial professional who can help you work toward your future goals. Click here to find your closest advisor and set up an appointment.