A step by step guide to vetting a new financial advisor
An organized process can help you find the right professional
Start with thinking about your goals and how you like to work
Research a list of prospects before you make a choice
Use Finra’s BrokerCheck
Starting to work with an advisor is an important step to reaching your financial goals. However, finding the right advisor takes time. The step by step process outlined below can help. It will guide you from the moment you first realize you need to work with someone to identifying prospects and, ultimately making a great choice.
Begin with thinking about what you want
The process for finding the right financial advisor begins with you, your significant other if you have one, a piece of paper, and some quiet moments. Ultimately, the decision about your advisor will revolve around what your goals are for your life. If you invest the effort upfront in understanding your needs, you’ll get a better result.
Take some time to document your current income, make a general list of the investments and debt you have, and any other items that impact your current cash flow. Then write down things that you’d like for the future that you haven’t accomplished yet. Do you want to buy a house? Retire at a certain age? Grow your family to include a certain number of children? Travel? Open a business? Purchase a vacation property? Support a nonprofit endeavor?
As you’re brainstorming, take another moment to think about how you like to work. Are you confident in your financial knowledge, or do financial matters seem overwhelming? Are you the kind of person who wants frequent updates about how things are going, or do you like to delegate? Do you want regular progress meetings? Do you want someone to set you on course, and then you can take it from there?
Capture all of your thoughts and then prioritize them. Keep these goals in mind as you look for an advisor.
Develop a list of names of potential advisors
The next step in the process of choosing a financial advisor is to develop a candidate list of people you’d like to work with. Ask for references from friends, relatives, or colleagues. Conduct an online search of brokers in your area and use it to add to the list.
Research names using an online service like the Finra BrokerCheck
As your list gets longer, make notes next to each name about why they were recommended to you. Note what was revealed about them on an internet search. Compare these details to the list you made about your needs and goals. That comparison should help you knock your list down to a manageable number of names. Once your list is shorter, research names that are left using an online service like the Finra BrokerCheck.
Conduct interviews, get references for your final choice
Take the time to meet with all prospective advisors in person. Meetings don’t have to last longer than a half-hour or so, but they will give you insight into how well you’ll be able to work with your advisor over the long term. You’ll also have the chance to ask important questions about how they like to work, how the way they work matches your needs, what they’ve achieved, and their fees. You can compare candidates based on their answers and how you felt about interacting with them.
By this point, you should be able to make a final choice between one or two candidates. Take time to follow up on references. Once you’re done, you’ll have enough information to select a professional you’ll work with for the long term.
A deeper dive – More from the 101:
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