Excerpts Published Thursday, September 12, 2014 by Lakeland Ledger
Everyone loves first-class treatment from a service oriented business. Don’t just look for a smiling face, perfectly pressed suits and shiny shoes, but gravitate to the advisor with a great reputation, years of experience and an investment philosophy most similar to yours and one that understands your entire financial picture.
WHAT DO I NEED FROM AN ADVISOR?
Investors should look for an advisor with investment credentials such as the Personal Financial Specialist (PFS), Certified Financial Planner (CFP), Certified Public Accountant (CPA), and one that is associated with an independent Registered Investment Advisory firm. Financial advisors are paid a few ways: commissions, fee-only, or a combination of commissions and fees. Commission based advisors may get paid through selling a combination of products and fee-based investment services. Registered Investment Advisors are held to the highest fiduciary standard by regulatory authorities and are paid only by management fees. A fiduciary is one that must, by law, only make recommendations that are in the best interest of the client. Most fee-only advisors are compensated by a small percentage of the account value. The only way a fee-only advisor increases their compensation is for the account value to grow.
OTHER IMPORTANT FACTORS
Other important factors to consider when selecting an advisor are academic credentials, experience, referrals from trusted individuals, and a combination of the following:
- An advisor that has time for you; if they are only paid by drumming up more business they might not have time for you.
- Long-term relationships are created through years of service. Choose the advisor you’re comfortable with and ask your friends for a referral from someone they have worked with.
- An advisor that is a true financial planner, and not just an investment advisor, so they can assist you with all of your financial planning decisions.
- An advisor that is a 3(38) fiduciary provides the highest degree of fiduciary duty to their clients. Make sure the advisor is in good standing with regulatory authorities by searching their respective website and annual SEC filings.
An investor can check an advisor’s credentials online by visiting the FINRA website and looking under the BrokerCheck® link to see if that advisor has ever had any litigation or judgments made against them for financial matters during their career as an advisor. https://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm.