You worked hard. You’ve been saving for most of your adult life. Now, you’re getting closer and closer to that ultimate goal: retirement.
If you don’t have a financial plan in place yet, now is the time to get started. And the easiest way to do that is by partnering with a financial advisor. But with so many options out there, it can be difficult to choose which one is right for you. After all, this is the person with whom you’re trusting your financial future.
That’s why we put together this list. These five tips will arm you with the questions to ask and the things to look for when determining the financial advisor that’s right for you.
1. Do Your Research
This is probably the first step you’ll take when looking for a financial advisor. Ask your friends and family for referrals. Look up potential candidates online. Recommendations from people you trust can really help you narrow down your list right away.
It can also help you find out if the advisor you’re about to work with has ever been involved in any unsavory practices. The SEC created an online database where you can look up any customer complaints, so it’s a good idea to look there to vet out anyone you’re seriously considering. You want to make sure that your advisor has a good, quality track record, and to do that, you’ll need to do some research.
2. Ask About the Services They Offer
This is something you’ll probably find out from your research, but you also want to make sure your advisor can handle your needs. Many people who first see a financial advisor are looking for help with growing their retirement savings. Mostly, this means making the right investments and putting money in the right accounts. If this is all you’re after, an investment advisor or even a robo-advisor might actually be the best course of action for you. However, as your wealth accumulates and as you get closer to retirement, you’re financial situation will get more complicated.
You might still want help with your investments, but once you retire, you’ll need to start taking withdrawals from those accounts. You may want to help pay for your children or grandchildren’s education. You could need help putting together an estate plan or figuring out your options for taking Social Security benefits.
If this is the case, you’ll want to find an advisor who can help you prepare a comprehensive financial plan. Not only will they be able to handle every aspect of your financial life, but they’ll also be able to bring it all together for you in one place to ensure you have all your bases covered.
3. Find Out How Much They’ll Cost—And How They’re Getting Paid
Once you’ve narrowed down your list of potential advisors, it’s time to talk dollars and cents. Typically, you might feel more comfortable saving this for last, but it can also be beneficial to get this out of the way early—especially when it comes to how they’re getting paid.
Your advisor may charge you by the hour, they could charge an annual retainer fee, or they might charge you based on your assets under management (AUM)—which just means they take a percentage of your invested assets. Or, they might make commissions off the products/services they sell you.
This is an important distinction, because when you’re choosing an advisor, you want to make sure they have your best interests in mind. If they’re getting paid off commissions, for example, you’ll always have the thought in the back of your head that they’re trying to sell you something you don’t need or isn’t right for you.
You should be comfortable with the amount you’re paying, and you should be comfortable with how your advisor is paid.
4. Determine If They’re Held to a Fiduciary Standard or a Suitability Standard
If your advisor is a fiduciary, they are legally obligated to look out for your best interests. This means that anything they recommend or advise you to do is what they truly believe to be your best option. With a fiduciary advisor, you don’t have to worry about them upselling you something you don’t need or advising you to do something you’re uncomfortable with. These advisors are simply doing what they believe is best for you.
If your advisor is not a fiduciary, they fall under the suitability standard. This means their recommendations must be suitable for your situation—which is a lower threshold than the best-interest standard.
With the suitability standard, you’re left wondering, “Is this the best option for me?” Perhaps this option earns your advisor a larger commission, is an easier transaction to close, or is not the lowest cost option. More and more advisors are becoming fiduciaries, but it’s still something to look out for.
5. Shop Around
If you’re not 100% on board with what you’ve been learning about your candidates, then keep looking! You want someone you can trust—someone to build a long, positive relationship with. After all, you worked hard to build up your savings, so you should have confidence in your financial future and the people who are managing it.
The advisors at Wealth Enhancement Group use our groundbreaking UniFi™ process to simplify your financial life by consolidating your financial information into a clear, easy-to-understand picture. We then consult our Roundtable™ group of experts to advise on every aspect of your financial life. Lastly, we guide you through the implementation of your plan, supporting you at every step and giving you the peace of mind to move forward with confidence.
So, if you decide that you’re ready to take the next step, reach out to a Wealth Enhancement Group financial advisor today.
CFP®, Series 7, 24 & 63 Securities Registrations,* Series 65 Advisory Registration,† Insurance License Mark joined Wealth Enhancement Group in 2001 because of the philosophy of teamwork and strong client focus. He strives to build trust and confidence in clients so they can be free to live their lives without the burden of managing their finances. Mark is a lifelong resident of the Brainerd Lakes area and he and his family enjoy all that northern...Read More