Choosing a Financial Advisor

The  right financial advisor can work miracles on your portfolio and successfully plan your financial future.  But with so many to choose from, there are bound to be a few that aren’t worth it.  But how to choose the right one?  Of the many factors to consider, there are four that are the most important.

Any financial advisor that is worth their price is licensed by the National Association of Securities Dealers.  This is the most important thing to check since you can then trust that they know what they’re doing.  If you can, get a financial advisor with a Series 7 license.  This opens up the opportunity for you to invest in virtually anything, excepting commodities.  This will save you trouble of finding a different advisor later.  If you already know what you want to invest in and those interests are limited to mutual funds, unit investment trusts, or closed-end funds then a Series 6 license will be sufficient.

Hire a financial advisor that has been working in the industry and been licensed for a minimum of three years.  It takes awhile to build a reputation and a good track record of success.  The longer they’ve been in the business the more experience they have and the more familiar they are with market trends.  This will ensure that you are getting the most competent financial advisor in town.

You’ll get better results with a financial advisor that doesn’t work solely on commission.  A fee-only advisor is ideal but they are few and far between.  Commission only advisors will tend to pitch you the investments they’ll make the biggest payday off of, not necessarily what’s best for you.  Working for a fee only or a fee and commission will get you a much less biased opinion.

Always ask for references.  And don’t just ask, follow up on those references.  Any competent financial advisor will have no trouble giving you a long list of satisfied customers as references.  If they can’t there’s probably a big problem that you haven’t seen yet and you should move on.

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Written by on June 13th, 2009 with no comments.
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