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How to Pick Your Financial Advisor


Many consumers don't know where to start when trying to find a financial advisor. In celebration of the Money Secrets:Keys to Smart Investing launch on April 21, 2015, we have an exclusive excerpt from the book.... we have listed a seven step guide to finding your financial advocate. Knowing what to look for is the first step! 

1. Competence:Ask the adviser about their experience and training working with clients like you—e.g., recently divorced women, pre-retired couples, professionals, new widows, business owners. Also, knowing an adviser’s formal educational background—both what they studied and where they went to school—may provide insight into their overall intelligence, knowledge, and problem-solving ability.

 2. Credentials:There are many credentials advisers can acquire, and these credentials provide further insight into the adviser’s specialties and commitment to ongoing education. Some of these include CFP®, ChFC® (for Chartered Financial Consultant), and CLU® (for Chartered Life Underwriter). See the glossary in Money Secrets for an abbreviated list of financial certifications and what they mean.

3. Clean Record:See if any complaints have been filed against the financial adviser you are considering. For unbiased information about advisers, go to, and for unbiased information on the adviser’s business, go to; for sales representatives and brokers, go to, and for CFP® practitioners, go to

4. Client Service:Ask the adviser about their process for providing updates on the status of your accounts, as well as how often they will meet with you to revise and update your financial plan. At minimum they should meet with you once or twice a year to do four things: 1. set annual goals, 2. rebalance your portfolio, 3. check the progress of your financial plan, and 4. create a year-end tax strategy. Also, be sure to ask if they will be available to answer any urgent questions about issues such as leasing versus buying a car or refinancing a mortgage.

5. Communication:Ideally, an adviser will assess your communication preferences to determine how best to work together. Do you prefer specifics and detail or bullet points and the big picture? Would you rather have formal, structured meetings or more relaxed, informal conversations? Also, how will communication occur, in person, over the phone, via email? An adviser who understands your communication preferences will be able to communicate in a way that reinforces your long-term relationship.

6. Commitment to professional standards:A financial adviser should have a commitment to ethical behavior and high professional standards. This is often displayed by membership or affiliation to one or more professional organizations, such as the National Association of Personal Financial Advisers (NAPFA), the Financial Planning Association (FPA), and the National Association of Estate Planners and Councils (NAEPC).

7. Chemistry:Search for a financial adviser who listens to your concerns and answers questions in a way you understand. In addition to understanding your financial data, a good adviser will want to know your emotions around money, as well as your dreams, aspirations, and goals for the future. An adviser who prioritizes these important factors will ask you questions about your values or offer assessments to better understand your financial perspective. If you do not feel comfortable sharing personal information, move along until you find an adviser you trust and look forward to talking to.

Responding to direct-mail solicitation, accepting free meals with a seminar, or clicking on an internet advertisement will not get you an ideal adviser. But understanding issues such as personal behavioral biases, compensation differences, and fiduciary standards will help you make a wise choice.

What was the most helpful step for you? Did you learn something new? 

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