After you attain a certain level of success and wealth, we understand it can be difficult to keep track of it all, manage it optimally, and stay in the know regarding the financial world. This is especially the case if you have a family you want to spend time with, a career or business you’re putting all your time in, or additional pursuits.
Fortunately, there are financial advisors out there that can help guide you and your family towards a financially stable future, or even take a more active role in managing a portfolio so you don’t have to stress yourself out about it more than once or twice a year. You should use your wealth to enjoy your life, and your wealth shouldn’t be using you.
Yet not all advisors and advisory firms are created equal, and what you should be spending your time on initially is making sure you can pair yourself and portfolio with someone you can completely trust. Which is why we’re here. In this article, we want to teach you about what an advisor could and should do for you, what makes a good advisor, and how to look for one in your area.
What Can a Financial Advisor Do for You
Each financial advisor or firm can vary in the range of services it offers. You may also find other services offered to you if you pass a certain income or portfolio threshold, or qualify in other ways. We’re going to focus on the main services, however, as most other services are merely specialized versions of the following.
If you want to trust your advisor to make some or most of your investment decisions for you, many firms offer portfolio management services. In most cases, they will talk with you to determine your goals, create a plan with you (mostly revolving around asset allocation), and then they will invest your assets accordingly and monitor them, usually readjusting your portfolio based on your instructions or how they see the market changing.
The types of investments and level of management will vary based on the firm and also based on the size of your portfolio, and in most cases the more money you’re working with, the more options will be open to you. It should be noted that some of the more prominent firms have access to groups, funds, and other options that you personally would not, adding value to the transaction for you.
Naturally, results may vary and not every advisor will be able to perfectly predict the market, but you will be working with an expert who follows investment news and trends as their full-time profession, removing from you that burden. You’ll need to set the pace when it comes to risk-taking.
If you don’t want services that are so hands-on, you can work with an advisor to simply get advice and set goals for you and your family, both short-term and long-term. They will help you find missteps and gaps in your strategy, ask you important and guiding questions, and in most cases will develop a document or written plan to see you forward.
If it is a one-time occurrence, you can use your plan to see you forward for the foreseeable future. If this is part of a long-term relationship, you will likely follow-up with them every six months or year to stay on track and make adjustments for changing economic realities and personal goals.
Some of the more specialized advice and guidance services we have found pertain but are not limited to:
- Divorce or bereavement financial planning
- Marriage financial planning
- Inheritance and family financial planning
- Financial planning tailored to business owners
- Planning services for doctors, lawyers, executives, or other professionals
Signs of a Good Financial Advisor
Look for a Fiduciary
Before you even consider any other factors, look for a financial advisor or firm that is clearly a fiduciary and is held to fiduciary standards. In short, this means that the advisor is bound to act in your best interest above all else. Anyone who doesn’t go by this standard is hardly a financial advisor and is extremely liable to lead you and your assets astray for the benefit of themselves or their place of work.
For more about the standards a fiduciary is held to, you can look here.
Fee-Only Is Preferred
On a similar note, you should try to find an advisor who is “fee-only,” which means that they don’t take commissions and don’t make money except via client fees. This is opposed to taking commissions from other institutions to push or sell their investment products, which creates a conflict of interest, even if they are a fiduciary. You may also find “fee-based” firms that mostly rely on fees but also sell insurance products or have a limited connection with other companies.
We would like to note that fee-only advisors are often a bit more expensive or have certain requirements of their clients (usually it involves a minimum investment or portfolio value). In some areas, it may even be hard to find one. The main point then is that you should investigate how a firm or advisor makes their income and remove any heavily compromised options from your list.
Organizational and Financial Stability
If you look at a firm and find that many of their staff or advisors have left recently, you may want to take caution and look elsewhere. The same goes if there are notes that the organization isn’t doing too well financially (not with their clients’ money, but themselves as a business). While your assets should be safe if something happens, you want to look for an advisor you can build a relationship with that will last decades. Don’t accept anything less than consistency and reliability.
Transparency and Ease-of-Access
You should not have to jump through hoops to talk to your financial advisor, and you should be able to schedule a meeting or a call within a reasonable amount of time. Your needs can change quickly, and so can the economic environment. Quick adjustments to your financial course are occasionally required, and you need an advisor that understands that.
Similarly, you should always be able to ask and understand what your advisor and their firm is doing with your assets. Anyone that looks as though they’ll hide behind tape or paperwork will not be a good fit for you, and you should always be able to have a friendly and frank conversation about how your money is working for you.
Follow-ups and Updates
You don’t want to work with an advisor who will manage your investments who will simply consult with you, create a portfolio, and then forget about it until you next meet with them. There is a place for long-term investing and sticking with a portfolio, but it should be an active decision, not a passive one.
Look for an advisor who will be willing to regularly rebalance your portfolio to your specifications, and who will also regularly update you on performance (we recommend at least quarterly).
The level of professional and formality you would prefer should be left to your preference, and it’s true that too much stiffness may actually be counterproductive in establishing trust and a good relationship between you and your advisor, but you should be absolutely sure that advisors and account managers will be working their hardest every workday to advance your interests. Standards will be different for everyone, but they need to meet yours.
Dedication to Your Goals
This closely ties into the idea that your advisor should be a fiduciary, but you need to make sure that your advisor is dedicated to your goals, not simply interested in accumulating more fees and commissions for themselves. Furthermore, you should be working with an advisor that can accommodate your goals, as every person is different and has a different level of risk-tolerance.
Portfolio growth and strictly saving for retirement can require different methodologies, for example. An education plan for your children may not be most profitable for your advisor, but it is most important to you. Find an advisor that respects those differences.
A Clear Plan and Philosophy
Not every financial advisory firm will operate in the same manner, and considering the diverse range of clients different firms accommodate they shouldn’t all be alike. What any good firm will have, however, is a clear plan and philosophy regarding how they operate and how they invest most clients’ assets.
Methods of Searching
There are quite a few ways people might first get in touch with a great financial advisor, but here are a few of the most common:
Make a List of Priorities
This is less of a method but instead a first step, and an absolutely necessary one. Do some more research into what you think an advisor would be able to help you with, and also consider what you want from your financial future. This is something you can talk about with a financial advisor and fine-tune with them, but having the broad strokes figured out is almost a requirement to find a good match.
Once you have your priorities in order alongside a general idea of your current portfolio and assets, you’ll be able to filter out the poor fits much more easily. This is especially important in some of the more saturated markets.
Asking for Recommendations
Depending on your contacts and situation, you may or may not be comfortable doing this, but you might want to ask trusted friends or family members if they have any recommendations or who they work with. The personal connection might separate you from other clients in the eyes of the advisor or firm and help establish a relationship much more easily.
It seems obvious, especially since you’re reading this as well, but an online search can do you a great service in finding a financial advisor, even if only giving you a list of names and organizations you might be able to work with. Just remember that an online search might not yield every result. Not all financial advisory firms are perfect with their online presence, and many rely on word of mouth or referrals from other professionals.
You also might want to keep the following in mind:
- Consider how old web pages and websites are. Some otherwise great firms don’t update them often, and the information will be out of date.
- You might want to be specific with your searches, at least for one round. Looking for an advisor that works often with divorcees, for example, might make such a search much shorter.
- Social media pages may be helpful in some instances, but in our experience, there is little to be gained or understood regarding a firm from them.
Speak to Several Advisors and Firms
There is nothing stopping you from shopping around for the perfect advisor, even if you have already met or had a call with another firm and things went well. Any professional firm will understand the need to be certain it’s a good fit, to the degree that they want a good fit as much as you do. Take notes and interview several potential advisors. Online information is great, but it can only go so far.
This can be quite a bit of information to take in, and it’s likely you can do even more research on the subject as well, but picking the right financial advisor is one of those decisions that will impact you and your family for decades, and we hope absolutely for the better. Take your time, explore all of your local options (and perhaps even some more remote ones), and we’re confident that you will be able to find a match and schedule a first meeting in a couple of days.