4 Things to Look For in a Financial Adviser header image

4 Things to Look For in a Financial Adviser

Perhaps you’re a couple of years into your first job, and are contributing to your 401(k). Maybe you have a family and a mortgage, and are thinking about your next steps. Or maybe you’re an empty nester, and looking forward to retirement. Whatever your stage in life, you might come to a point where you’re wondering: Do I need help investing my money? At this point, you’re probably considering a financial adviser, but how can you find a financial adviser you can trust? Use these four tips to help you make a decision that works for you, no matter your stage in life!

What Certifications Do They Have?

First, you’ll want to research the credentials of any potential financial advisers. By definition, “financial adviser” is a term for anyone who provides financial advice in return for compensation. When choosing a financial adviser, it’s a good idea to start looking for a Certified Financial Planner (CFP). This designation indicates that your adviser has completed extensive exams in areas like financial planning, taxes, insurance, estate planning and retirement.

In addition, certain licenses can be an indicator of what services or products a financial planner can provide. The most common licenses to look for include:

FINRA Series 6: Looking for a financial planner who can sell mutual funds? You’ll want an adviser that has passed his or her Financial Industry Regulatory Authority Series 6 exam.

FINRA Series 7: The Series 7 license is for advisers who want to serve as general securities representatives. This means they can buy and sell all securities products, like stocks, bonds, mutual funds and fixed-income investments.

NASAA Series 65: The North American Securities Administrators Association has a series of exams to confirm an adviser has the knowledge needed to practice in certain areas of the country. This is for investment advisers that manage accounts and portfolios for clients for a fee, but who do not buy and sell securities themselves.

NASAA Series 66: This is for financial advisers that want to serve as broker-dealers, who are licensed to buy and sell investment products, as well as investment advisers, who are licensed to provide financial advice for a fee.

How Do They Get Paid?

Financial advisers do not work for free. Typically, they are paid two different ways:

Fee-Only: This means your financial adviser will charge you a rate based on what assets they are managing.

Commission: A financial adviser may also be paid via commission, based on what products you purchase from him or her. This is more common when selling annuities, life insurance or disability insurance.

Determining what your financial adviser will charge and when can help you make a decision that works best for you. Feel free to sit down with your adviser and ask what he/she charges for their services. There may be an initial planning fee, for example. Cost shouldn’t be your only factor in choosing a financial adviser, but it’s best to understand these aspects up-front.

What Type of Clients Do They Typically Work With?

When choosing a financial adviser, you’ll want to get a feel for what kind of clients they typically handle. Some financial advisers have knowledge that they are known for. If you have a specific interest that is important to you, like charitable giving, finding a financial adviser that has experience in this area can be very beneficial.

In addition, it’s important that a financial adviser work at the same scale you are. Your needs can be very different if you’re just starting out versus just a few years from retirement. You want a financial adviser who understands your goals and will help you achieve them.

Can They Work With You?

Finally, it comes down to personalities; can you see yourself working with this person, and vice versa? How much contact do you want with your financial adviser, and will you be working one-on-one or with a team? All of these customer service touches can make or break a working relationship, so it’s important to determine what you expect from a financial adviser beforehand. He or she will be helping you manage your money: that requires trust and clear expectations.

Investing In Your World

Choosing a financial adviser is a big task, but by applying the tips listed above, you’ll be equipped with the information you need to make a choice that’s right for you.

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