Your 6 Step Checklist When Picking A Financial Advisor

Picking a financial advisor can be a daunting task. "What do I look for? Where do I start? Do I even need one?” These are a few of the questions you may ask yourself when starting the process. Many times, not knowing the answers will stop the process right there. This checklist will help you through this process and know what to look for and ask.

1. Ask family, friends, and co-workers who they use and recommend

The best place to start for most people is asking close friends, family, or coworkers who they use and if they recommend them. Ask them what their advisors communication style is like and how often they meet with them. Asking people who you trust is often the best predictor of a successful engagement with a financial advisor.

2. Know what you are needing

You’ll want to have a good idea of what you are needing the financial advisor to help with. Do you want them to manage your investments? Create a financial plan? Help with budgeting and debt repayments? All the above? Like shopping for groceries, knowing what you want before you start “shopping” for a financial advisor will help you avoid purchasing things you don’t need.

3. Search online for advisors in your area

The next area to research is online. Doing a quick search of financial advisors in your area will give you many options. Their websites will have a ton of information. Does the information on their website speak to you in some way? If so, go ahead and reach out for further information.

4. Look for advisors who have a CERTIFIED FINANCIAL PLANNER certification

Full disclosure - I am biased on this step as I have the CFP®  designation. A CERTIFIED FINANCIAL PLANNER™ is held to the highest standards for financial advisors. They are sworn to act in a client’s best interest at all times. This is the fiduciary standard. And it may come as a surprise, but not all financial advisors are held to this standard. That being said, if someone doesn’t have this designation doesn’t mean they can’t be a great advisor for you. What I’m saying is if they do have the CFP® marks, then a large part of the due diligence process has already been done for you.

5. Know how are they paid

An important part of picking a financial advisor is knowing how you pay them. Are they paid on commission? If so, then that means your advisor is paid when you buy something they recommend. You may need this or you may not. In my opinion, being paid on commission introduces the possibility of not acting in a client’s best interest. My recommendation is to find a “fee-only” financial planner. This fee can be for hourly services, monthly retainer, assets under management, or some combination. Assets under management, or AUM, means the advisor is paid a percentage of the investments they manage. Usually the AUM fee is deducted from your portfolio balance. This is not to be confused with “fee-based” as that means they can also earn commissions.

6. Communication

Perhaps the most important step is making sure the communication between you and your potential advisor is nothing short of great. Does your potential advisor explain things clearly? Do they talk over you? Do they not listen to your concerns? You will want to chose someone who understands you, knows your goals, strengths, and weaknesses. Your financial advisor is going to know a lot about you and your family. They are going to be, or should be, one of the people you trust the most. Are you a number in their eyes or do they view you as a partner?

This checklist will help you through the process of choosing a financial advisor. If you are in the market for a financial advisor, I would be honored to take an initial meeting with you to see if we are a good fit. If you are interested, click the schedule meeting button below and choose the Initial Consultation option.

Full Disclosure: Nothing on this website should ever be considered to be advice, research or an invitation to buy or sell any securities. Please see the Disclaimer page for a full disclaimer.

About The Author

Shaun Melby, CFP® provides fee-only financial planning and investment management services in Nashville, TN. Melby Wealth Management serves clients as a fiduciary and never earns a commission of any kind. Shaun has over 10 years of experience as a financial advisor in Nashville.