How to Effectively Research Financial Advisers

Financial advisers play a key role in growing their clients’ finances. Individuals and business owners alike should carefully consider each candidate when selecting a financial adviser as this decision will impact their future financial success. Finding the best firm or person to hire in the position of a financial adviser should be a thoughtful process with careful research. Consider the following methods for identifying the right financial adviser:

1. Know the Different Types of Advisers

The most effective way to analyze advisers is to first determine what type of adviser you’re looking for. No two financial advisers are alike. While many advisers do offer similar services, there is a wide variety of financial services available to you.

Some financial planners are all-inclusive and offer everything from investment management services to detailed financial planning. Others may manage investments but forego retirement income planning. Pinpoint what services you’d like to focus on during the early research phase to make sure you connect with a financial adviser that offers the services you’re searching for.

Consider the following three main services that most financial planners offer:

  • Investment advisory services – Advisers that offer investment advisory services focus on investment management. This type of adviser helps clients choose what investments to own for each account. These advisers choose the best investments as part of a financial planning process.
  • Financial planning – Advisers with a specialty in financial planning focus on various aspects of their clients’ financial lives. They will advise you on how much you should save, the type of insurance you need, and oftentimes, what investments you should consider.
  • Retirement income planning -Retirement income planning is another focus of some financial advisers. These advisers focus on everything relating to your personal finances, investments, taxes, retirement age, social security, and anything else having to do with your retirement needs.

2. Weed out Unqualified Advisers

In your search for financial advisers, don’t forget to include careful vetting as part of your process. While some financial advisers may appear to be qualified on paper, the reality is that in person, they may be anything but. Experts suggest that potential clients review the credentials of every adviser.

In your research, it’s important to properly differentiate between certain types of credentials. While many advisers earn their qualifications, others choose to pay for their certifications. As certain organizations offer credentials that anyone can pay for, it’s important to weed out these pay-to-play advisers by searching for professionals with reputable credentials like CFP (College for Professional) training, a PFS designation (Professional Financial Specialist), or a CFA certification (Chartered Financial Analyst Certificate).

All of the aforementioned credentials are earned after an adviser passes an examination. These credentials demonstrate that an individual is proficient in their area of expertise. In the case of the Personal Financial Specialist designation, an adviser must follow a strict ethical policy while meeting their continuing education requirements.

Consider using the Association of Personal Financial Advisers website in your research efforts. This membership group requires every adviser to meet continuing education requirements that surpass the required credentials.

3. Understand How Financial Advisers Earn Money

Financial advisers are compensated in a variety of ways. Narrow down your list of potential advisers by verifying their preferred method of compensation. When hiring a financial adviser, you’ll find that some charge an hourly fee, while others may take commissions or charge an asset-based fee.

In addition to determining how an adviser is compensated, make sure you understand what non-fee-only and fee-only advisers are. Non-fee-only advisers may receive additional incentives or kickbacks from their employer based on certain objectives or sales goals. Fee-only advisers are registered advisers that don’t accept compensation or fees based on their sales. As a result, these fee-only advisers will have fewer conflicts of interest.

Though many experts suggest working with fee-only advisers exclusively, there are multiple ways an adviser may be compensated. Some clients find that paying by commission is the most affordable option for ongoing investment advice. Likewise, fee-only advisers may be the best option for clients that need an adviser to update their financial plans and offer advice on a regular basis. Determine which compensation methods fit your needs and choose a financial adviser accordingly.

Another way to verify an adviser’s credentials is it read online profiles like this one about Fisher Investments. These types of profiles tell clients everything they need to know about the individual or agency they are thinking about working with.

4. Narrow Down Advisers with Search Engines

As you search for the right financial advisers, don’t neglect online searches. With an extensive online search, you can easily pinpoint the best advisers for you. Search by details like your zip code, preferred billing structure, and ideal credentials to find an adviser that will meet your needs.While you can conduct a basic Google search to find an adviser, there are many dedicated search engines that are designed to help connect clients with the right financial advisers. Consider using a search engine like The Financial Planning Association, Boomerater, the National Association of Personal Financial Advisers, or Paladin Registry to conduct a thorough search for advisers. Though each search engine has its own particular process for searching, using these services will connect you with already-vetted advisers.

5. Ask Each Candidate the Right Questions

As is the case with any new hire, it’s important to ask your potential financial adviser the right questions to weed out those that you may not work well with. Use specific and detailed interview questions to determine the adviser’s area of expertise, their ideal client, and their preferred communication style. Basic questions should cover the type of services advisers provide and the typical kind of clients they work with. Additionally, it’s important to ask what the preferred communication method they have and how often you will communicate with each other.Take the time to be cautious about the individual or agency you choose to hire for their financial advising services. Not every financial adviser is the right fit for you or your business. If you’re in the process of selecting a financial adviser, be sure to take these strategies into careful consideration.


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