[In Pictures: 6 Numbers Every Investor Should Follow.]
With well over 300,000 financial advisors across the U.S., it’s difficult to figure out who will give you good counsel for your situation. Unfortunately, the risk falls solely on you, the investor.
In 2009, with so many people scared to death of the markets keeping them from retirement or worse, forcing them to return to work, I decided to write a book called Fire Your Broker. It became an instant success. Quite simply, people were looking for help, but couldn’t find it. They were seeking a good steward of their finances.
Even today, over two years later, it’s still amazingly difficult to find the right person who has your best interest at heart.
Here are three things you need to look for in the person that will be navigating your financial life.
First, look to the Certified Financial Planner Board to find the right person to help you make good decisions. Why work with a CFP? Their process will begin with a financial plan. Anyone that is worth his weight will only begin working with you after completing a full plan so that he understands where you stand and where you are going. The planning process will include an extensive quantitative inquiry about where your money is and what you will need in the future. Even more importantly, the plan will include qualitative questions about who you are as an investor, the amount of risk you are willing to take, and what your hopes and dreams are for the future. This is so much more important than a rate of return. For your advisor to understand you is of utmost importance.
Second, find a planner that will work for a fee and not be strictly commission-based. The best financial representatives will complete your financial plan for a set cost (usually between $1,000 and $3,000) with no strings attached. This avoids any secondary agenda in their recommendations. The more unbiased your plan, the better it is.
Also, when an advisor charges you a fee, you know he is licensed as a Registered Investment Advisor (RIA registered with the SEC). This is important because you can do a check on his record by going to www.sec.gov and performing a “Broker Check.” Here you will see any issues he has on his record, like customer complaints and/or rule violations. Also, when an advisor charges you a fee, he is legally required to act as a fiduciary. This simply means that he has a legal duty to put your interests ahead of his own.
Finally, when trying to find the right financial consultant, look how his business is set up. Is that person acting as a one-man show, or does he have a full staff that will be able to help you when your advisor is in a meeting, out of the office, or on vacation?
A couple of years ago, I asked one of our clients why he left his old broker for us, and he told me a startling story. He said he and his wife needed information about their assets for a mortgage they had applied for. Apparently his broker was on vacation and the assistant was new and did not know how to access any of the client’s information. He had to wait a week to get his questions answered. That’s not what I consider full service. A complete staff will be able to help you anytime you need it.
Use the above tips to help you find the right person to guide your financial life. Hiring the person that has the legal responsibility, knowledge, ethics, and team to meet your needs is the key to your comfort.
Good luck and happy investing.
Kelly Campbell , CFP® and Accredited Investment Fiduciary, is founder of Campbell Wealth Management, a Registered Investment Advisor in Alexandria, Va. Campbell is also the author of Fire Your Broker , a controversial look at the broker industry written as an empathetic response to the trials and tribulations many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.