There are so many things you should consider when looking for a financial advisor. We have already covered 10 questions you must ask anyone you’re interviewing to help you manage your financial life, but there’s so much more even within those 10. We want you to know exactly why you’re asking those questions and why they matter.
Let’s dig deeper into 3 of them right now!
We can still complain about the literal hundreds of names and titles that FINRA has for this profession, but the differences can matter. First things first, though. Why did this make the list at all? Technically, you don’t need any special training or experience to even call yourself a financial advisor. That in-of-itself can be risky, kind of like signing up for an online fitness course by the latest “Insta-Fitness Model”. If you’re not careful, you could pull something.
But in all seriousness, with something as important as your financial health, you want someone with provable training or a designation. That said, titles aren’t everything.
An advisor doesn’t have to have a designation to be worth their weight in information gold. Some advisors are second or third generation, inheriting the family business. They live and breathe the industry to the point that “fiduciary” was their first word.
Or, perhaps they have incredible documentation in client case studies or testimonials from other industry professionals.
Here are just some of the titles you may find:
Certified Financial Planners (CFP®) are generally trained to help you plan the “big picture” of your financial life. They may or may not specialize in any areas. Some CFP® 's have additional designations, as you’ll see below, which will indicate what areas they may have unique qualifications in. To become one, the planner has courses to complete, have experience “in the field” and pass a very complex exam.
Chartered Financial Analysts (CFA) are focused on investments. The requirements include courses, 4 years of experience in the field, multiple exams and stringent ethical standards. Like CFA’s, Registered Investment Advisors (RIA’s) also specialize in investments, but their qualifications for this title are different.
When looking for a financial professional, a title can help you discern the qualities you’re looking for, but they shouldn’t necessarily have the final say.
A CFP® may meet all of the standards the industry demands, but a veteran planner with 20+ years of positive experience, even without that designation, is also fine, too.
Are you a Fiduciary (and other similar regulatory questions)?
In the previous post, we stated that a fiduciary must put your best interests first - “hard stop”. But, what exactly does that mean? Simply put, it means they have to do what’s best for you even if that means they make less money.
Your best interests means that not only does your advisor/planner put your interests ahead of their own, but they must also disclose all of their fees in detail and must explain them in a clear and understandable manner. They also have to identify and disclose any potential conflicts of interest.
It’s true that non-fiduciary advisors exist, and they may give good advice. However, they’re not required to put your interests ahead of their own. They can make recommendations, but they may include aspects that also benefit them in the form of higher sales or commissions.
So, when you ask this question, you want “yes” to have the piece of mind of being guided by someone who’s impartial.
A “been there, done that” advisor is someone you want in your corner. The kind of financial planner you choose will depend on your age, your specific goals, whether or not you have your own business, if you need help with retirement, what kind of investments you want to make, etc. You have every right to choose someone who you not only feel comfortable working with, but also someone who “matches” you in the ways that matter most.
For example, perhaps you’re a millennial business owner and you’d be more comfortable working with a seasoned professional with that exact client portfolio.
Or, perhaps you want someone who can help you navigate your way out of debt or saving for a large purchase. Maybe you are a family business owner and you want a planner who can help you navigate the oft-delicate situation surrounding family succession.
Regardless of your specific goals, it is helpful to find an advisor who deeply understands what goals are important to you. They’re the only ones who can foresee the nuances that come with your particular situation long before you step into the office.
We could be a perfect fit
At Custom Wealth Management, we provide a unique and memorable experience and strive to always do the right thing, with clarity and integrity. We’ll answer any questions you may have, including the previous three, to your satisfaction in as little or as much detail as you’d like! Give us a call today. We look forward to speaking with you!