How do you choose a financial advisor?

The wife and I are at a point where we'd like to get some professional help with our long-range financial goals. But we aren't sure how to go about picking one. Anybody gone through the process and have any tips?

 

I'm a commercial lender, so I am often a de facto financial advisor to business owners, but only on that side of things. Liability precludes me from making actual recommendations (lending is not regulated in the same way as brokering) but it's not unusual for me to steer clients in a certain direction or advise them to think about something that they may not have considered. Ultimately the decision lies with them.

What I've found in a short period of time is that price is not typically the main driver for my clients. I'm upfront with clients and prospects -- my institution is probably not your most affordable option as it relates to rates, fees, etc. But we do maintain close relationships, check in on a regular basis and act quickly when something needs to be done. That's not to say you have less risk, but at least you know I'm going to return your phone call the same day.

Recently, I had a guy come to me for a loan to buy a gas station. He was shopping banks, and when one of them gave him a commitment he asked if I could beat the rate. After some consideration, I told him that in my opinion, it wasn't in his best interest to buy this business because of various risk factors that I explained to him. Based on that, he decided to forgo this opportunity and continues to look for one that would be more suited to his needs and our underwriting standards. When he finds it, he says, he will deal only with me and my bank, and he won't haggle too much on price.

On the other hand, I have some clients who are more transaction-oriented. They want a yes or no answer, they want to negotiate every point, and they will never speak to me again after the deal is closed. Those are the ones that are more into the short-term view, and I tend to cool on them once I sense this characteristic, because honestly they are better suited to a different kind of institution. It's just another way of doing business, and that's not to say it's going to be worse or better for them in the long run.

I'm sure you can imagine what kind of relationship is more preferable to you. I advise you to explore as many options as are practical and to go with your gut feeling about the person you are dealing with.

 

Try to find a good fee-only advisor. Their incentive is to help you, not make commisions by churning up your account with unnecessary trades.

And Pirates, I love the way you are doing business. I'd settle for getting the bankers I deal with here to make a decision sometime in this Biblical epoch.

 

As with picking any professional, see if there's a professional organization or credentialing process that lists its members on its website.

http://en.wikipedia.org/wiki/Certified_Financial_Planner

There are links at the bottom to websites and "choosing a financial planner."

It also doesn't hurt to ask friends for recommendations in your area, just make sure the planner is adequately qualified.

 

I agree with this. I'd rather be getting a good, honest effort from someone and pay for it than wonder if they are so high on certain mutual funds because they get a big fee for selling them.

 

in addition to the above advice, get one who is willing to work with you based on your tolerance/risk level. If you get nervous when the market drops a few hundred points in a day, you may want more conservative investments. If you don't mind the a drop of a few hundred points in a day, knowing the market will bounce back over time, then you may want more aggressive investments. You need an advisor who will put you into funds/stocks within your risk/tolerance level.

 

I was chatting up a girl at the bar last night who's a financial advisor. Let me tell you, I'd choose her every day of the week.

 

Ask around and get some suggestions. The one criteria NOT to use is the returns they'll claim they get for their clients. You need someone to tailor your plan to YOUR needs, which are going to be different than every single other person an advisor works for. You also want someone who's going to be active in following your investments; there are a million people out there who will take your money, put it in a couple of funds and then forget about it until they need to make some commissions.

 

Load or no-load?

 

I hear there are some excellent finanical advisors working out of Nigeria. You should get on their mailing lists.

 

My dad's been at Merrill Lynch for 40 years and my brother has been there for 12, plus I actually worked in the business for a couple of years -- before deciding that I wanted to do something else with my life.

 

This is a good question.
I'm sorta at a point where I'd like to meet with someone -- do you have to hire them forever/for an extended period, or can you just meet with someone to give you one-time/two-time guidance?

I seriously don't think I know anyone who has a financial advisor, so I'm at a loss how to ask around & find one ...