It’s perfectly normal to feel a bit overwhelmed with the constant flow of financial information being thrown at you on a daily basis.

This feeling of overwhelm and confusion can lead people to seek out the help and expertise of a competent financial advisor.

But before you open up your trusty Google search engine to start your search for a financial advisor please consider these three steps to find a financial advisor you can trust.

How to Find a Financial Advisor You Can Trust

The first thing you could do is ask around and/or search on google for financial advisors in your area.

Now be careful with this step. I’m sorry to say that a lot of people, while well-intentioned, simply don’t have a good understanding of the financial advice landscape.

I’ve had people tell me that their financial advisor was the local bank teller or, even worse, that their uncle “who used to be in the biz” is the person helping them plan their financial future.

It’s a good first step to just ask and see if anyone has someone they are really happy with. I would stick to asking only friends and associates that you trust and respect. If nothing seems to catch your attention then you might have to start searching on your own using Google.

The second step is to go ahead and call the advisor on the phone. If you don’t like to talk on the phone you could always send an email. I suggest the phone because you can find out a lot by simply calling a financial advisor.

For instance, it wouldn’t be odd to get voicemail. If you leave a message telling the advisor you would like to speak with them and it takes them a week to get back to you that could be a red flag.

Sure the advisor could be busy but if it takes him a week to get back to a new prospective client then how long does it take him to get back to clients who have questions or concerns? Maybe he’s just so busy he doesn’t want any new clients. It’s a mystery.

Questions to ask a potential financial advisor

Once you actually speak with the advisor over the phone there are a few questions you should ask to start the selection process. They are:

1. What type of financial advisor are you? Are you with a big wirehouse/brokerage firm or independent?

In most cases an independent advisor is going to have more flexibility in the solutions they can provide to you. These are entrepreneurial advisors that have some experience.

I started my practice as a wirehouse advisor with a big firm. I’ve now been independent for almost four years. My take is that if you’re going to hire an advisor to give you objective advice and direction then you should consider an independent advisor.

If you have more questions about why I recommend independence over “captive” financial advisors just email me and ask.

2. What type of client do you work with? What you’re looking for here is if the advisor works with people that have similar financial circumstances as you. Is the advisor focused only on the retirement aged person or do they focus on working with gen X families?

The type of clients an advisor works with can have a big influence on what types of solutions they provide. An advisor focused on just retirement aged clients may be more inclined to offer solutions based on excluding as much investment risk as possible and producing income while an advisor that works with younger families may be better at helping their clients implement more growth oriented solutions and accumulating more assets.

You want someone that is focused on providing customized solutions for your circumstances and goals.

3. How are you paid? I’m not going to sit here and say that one way of being paid is better than another. In my eyes there are times when a commission compensation structure makes sense and a time when a fee based structure makes sense.

In my own practice I am fee based and my clients pay me an annual fee that is either based on assets under management or projects performed. I find this makes clients comfortable because they know I’m always around when they need me and that my objectives are aligned with theirs.

Asking the question about compensation will help you understand how the advisor gets paid and you can decide if you are comfortable with that method or not. It’s up to you.

Quick warning… Don’t work with an advisor that says they provide services for free. Services like comprehensive financial planning take a lot of work when done correctly. The same goes for portfolio management. If they say they do this kind of stuff for free I guarantee that is a way to “get you in the door” and then sell you on high commission products. I’m all for paying your professionals a fair fee but I’m not for slick sales guys trying to hide the fact that they have to make a living.

If the financial advisor has answered your questions and asked you some questions about your situation then it is time to schedule an initial meeting.

I’m a fan of a “get-to-know-you” meeting as the first interaction. I don’t make any specific recommendations in that first meeting. I just try to understand what the client is looking for and wants to accomplish.

I also want the client to understand what a long-term relationship would like like with my firm. Plus I want them to get comfortable with my approach which is very laid back and quite different from what people expect, or, are used to in my industry.

I’m a trusted advisor in my role, not a guy trying to jam you up with products. Being a trusted advisor means being focused on the long-term and acting as a fiduciary for clients.

If you have a meeting with a financial advisor and all they want to talk about is me, me, me and product “XYZ” then I suggest you excape as fast as you can.

That brings you to the final step of finding a financial advisor and that is actually selecting a financial advisor.

I’d like to say that there is an exact science to finding a financial advisor but in reality it comes down to rapport and trust. And sometimes those two things together can be hard to find.

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