Welcome back to our series where we provide readers with the tools and resources to find the right advisor team for them. Working with a financial advisor is a meaningful decision. They can help you use your money to reach your goals and live life to the fullest. But not all advisors will be the right fit for you.
Our first article delves into the true meaning of the word fiduciary, including our own philosophy on the topic and how it influences our client relationships. We also discussed the value of transparency in advisor fees and prompted people to understand the level of service they get for the fees they pay.
This entire series encourages clients to ask questions. Learn what you can about your current or potential advisor, because it can illuminate what you want and need as well as the type of advisor who can help you get there. When you feel comfortable asking questions, you’ll be more engaged in the process, which can augment your financial plan.
Do some digging
Wouldn’t it be nice to know something about the background of an advisor you’re considering using? At TFS, we have advocated for years that you check out your current advisor, any potential advisor, and frankly, us too! We have always thought that information from an uninterested third party would empower clients in their relationships with their advisors.
Investigating your advisor isn’t always a simple process, but a good starting point is the Financial Industry Regulatory Authority (FINRA). FINRA is a government authorized non-profit that oversees brokers in the United States intending to protect investors. They have a feature called a broker check, which allows you to obtain key information about brokers and brokerage firms.
FINRA feels so strongly about this that it is required as a direct link on our websites. This site also has great educational information for the public, free from advertisements or any attempt to sway your thinking.
You can find a broker’s credentials, licenses, and other qualifications as well as disclosures from client complaints, criminal activity, disciplinary actions, and even unresolved or pending disputes. Additionally, you can check out your local state-level department of financial institutions or state-level Office of Insurance Commissioner for any filed complaints against an advisor you are vetting.
Keep in mind that just because a report displays that an advisor has a complaint or bankruptcy doesn’t make them a bad advisor. For example, an advisor may have needed to file for bankruptcy because their spouse had cancer, and they spent every dollar they had for care. If you find an advisor who has one of these items on their record, it just gives you an opportunity to ask questions.
While this might seem like an extensive process, it’s really about ensuring your money is in the hands of someone who will help you find success. These are simple ways to see how your potential or current advisor has conducted business in the past, and as the saying goes, there is no better indicator of the future than the past.
Shop before you buy
Whenever you make a large purchase, you always do a meaningful amount of research. You look at the price, the quality, the features, the value, and how it will impact your life. Working with a financial advisor is an investment, one that should be made with careful thought and consideration. Be mindful of the parameters you use when searching for a financial advisor. Keep these two ideas in mind throughout the process.
- Don’t let price be the only factor you consider
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- While cost should play a role, it shouldn’t be the determining factor when deciding whether or not to work with someone. Take your last cell phone purchase as an example. Which did you end up getting, the free phone or the brand new iPhone? You likely sprung for the iPhone because of the many features available that the free phone doesn’t offer.
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- Define what success looks like and means to you
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- When working with the right advisor, it’s critical to determine your parameters of success. Is it simply the rate of return or does it go beyond that to things like reaching financial freedom, achieving your goals, or living life with purpose?
By researching, vetting, and asking the right questions, you will be able to determine if your advisor is truly working for you or not. We want you to make informed decisions about your financial life. Entrusting your wealth and wellbeing to an advisor is a significant step, you want to make sure you work with a professional who works hard for you and your goals.
Proper financial planning should be empowering. We are here to help bring you the tools and resources you need to use your money to enhance your life. Ready to learn more about our commitment to you? Schedule a call with our team today. We can’t wait to serve you and help you reach your goals.
