Studies show that people working with financial advisors feel significantly more secure about their financial future1 – and for good reason. A skilled advisor can help you navigate complex financial decisions and build long-term wealth. But how do you find the right one?
Not all financial advisors are created equal. Registered Investment Advisors (RIAs) operate under the highest legal standard as fiduciaries—they’re required by law to put your interests first. Broker-dealers, while still regulated, follow a less stringent “best interest” standard. Then there are robo-advisors, which offer automated investment management with minimal human interaction. Be sure to find out what type of advisor you’re getting before you choose.
While many advisors focus solely on managing your investment portfolio, wealth management firms take a more comprehensive approach by considering your entire financial picture. From tax planning to estate planning to insurance – the broader the service offering, the more thorough and cohesive the guidance you’ll receive.
In the financial world, credentials demonstrate expertise and commitment to professional development. The Chartered Financial Analyst (CFA) designation is considered the gold standard for investment management, while the Certified Financial Planner (CFP) designation indicates expertise in comprehensive financial planning. Don’t hesitate to ask about an advisor’s qualifications and what they mean.
Transparency about compensation is crucial to building trust and understanding an advisor’s motivations. Fee-only advisors charge directly for their services, typically as a percentage of assets managed or a flat fee. They don’t earn commissions from financial products, which helps minimize conflicts of interest. Transaction-based advisors may receive commissions in addition to client fees. Make sure you understand exactly how your advisor is compensated. It should be clearly explained in writing.
Your relationship with your financial advisor is just that – a relationship. Which means regular communication and reporting are essential. Look for an advisor who provides comprehensive performance reports and meets with you at least annually to review your portfolio and discuss any life changes that might affect your financial plan. You should feel comfortable reaching out with questions and confident that your advisor will be there for the long haul.
Finding the right financial advisor isn’t just about credentials and service. It’s about confidence. Take time to meet potential advisors, ask questions, and ensure their approach aligns with your goals. The right advisor will not only help manage your investments but will serve as a trusted partner in building and preserving your wealth for years to come.
Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen, or experience. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. Nothing in this communication is intended to be or should be construed as individualized investment advice. All content is of a general nature and solely for educational, informational, and illustrative purposes. Industry registrations, designations, recognitions or awards should not be construed as an endorsement or a recommendation to retain the Adviser by the granting entity or any regulatory authority. A detailed description of listed professional designations is available upon request on our firm’s Form ADV Part 2B.
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References:
1. Northwestern Mutual 2023 Planning & Progress Study