How Can a Woman Find a Financial Advisor She Can Trust?

by financialmom on February 25, 2010

in Financial Advisor, Investing

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Here is a step by step process, with specific questions to ask, to help you find a trusted financial advisor:

Recommendations

Decide what you need help with first.  Then talk to family members, friends, your accountant, your lawyer.  Get some names.  And then the fun begins!  Do not assume since your brother-in-law or co-worker or bff recommends a particular financial advisor, that person is a good fit for you.  You need to do your own due diligence to determine whether you want to work with someone.

Phone Interview

Talk to a potential financial advisor briefly on the telephone to determine whether you are the type of client they will take on.  Do they have account minimums?  Do they work with people like you?  If they do, set an appointment to do an in-person interview with them.  Ask them if they will charge you for an initial consultation – most advisors will not.  And yes, I did mean to say interview – you are interviewing the financial advisor for the incredible privilege of working with you!  This means you are in the driver’s seat, not them!

Check Them Out

Ask where the financial advisor is registered, and check them out!  Make sure they are squeaky clean.  You can check out financial advisors by going to  the Financial Industry Regulatory Authority website at www.finra.org, and click on Brokercheck.  It’s very easy, and you will find out all kinds of background information about the financial advisor - where they have worked in the past ten years, any complaints registered against them, and what licenses they hold for securities.   If they are a Registered Investment Advisor (RIA), you can go to the Securities and Exchange Commission website at www.sec.gov, and click on Check Out Brokers and Investment Advisors.

In Person Interview

Here is where your due diligence process comes in.  It is up to you to determine whether you want to work with this financial advisor. Think about all the investigation we do when buying an appliance, or a car, or furniture for our home. Get face to face with them, and ask every single question listed below! In fact, print this whole blog post (see print option under the title), and take it with you to your meeting.  This is your financial future we are talking about, and you need to do the homework!

Questions You Need to Ask

  1. How long have you been a financial advisor? This is not the most important question of all,  but it will speak to experience.
  2. What licenses and certifications do you hold? Make sure they are licensed to sell securities in your state, and if they have any special certifications that may be important in working with you.
  3. What kinds of continuing education do you do?  How many hours? The financial industry is constantly changing, and you want an advisor who is always learning, and not stagnant.
  4. Do you have any areas of specialty? Many financial advisors today are choosing to specialize in certain areas, and this could be a big benefit to you.
  5. Who is your ideal client? You want to know if they have experience with and enjoy working with people just like you!
  6. Are you a fiduciary? A fiduciary is required to act with undivided loyalty to the client, disclose exactly how they are compensated, and disclose any possible conflict of interest in working with you.  You want this in your advisor.
  7. How do you make your money?  Are you commission-based, fee-based, or a fee-only financial advisor? Make the advisor tell you exactly how they are paid!  You want to know how subjective an advisor is, and if they could be influenced by compensation they could earn from an investment, or limited in what types of products they can offer.
  8. What is included, and what is not included in your fees? Do they have different fees for different services, and what are those fees?
  9. Will you work with me personally, or will you pass me off to someone else in your firm? If it is very important to you to work with this advisor only, you want to know this up front.
  10. Who will take care of me if something happens to you? If this advisor gets run over by a bus tomorrow, who will take care of your investments?
  11. Where do you hold your securities? Who is the custodian for your investments?  Very important – hint, hint, Bernie Madoff!
  12. Do you use a written Investment Policy Statement? Do not work with a financial advisor who is not willing to put all the terms of your investment in writing.  This includes investment philosophy, investment objectives, time horizon, tax policy, asset allocation, diversification, your duties and responsibilities as a client, and the financial advisor’s duties and responsibilities as an advisor.
  13. How do you communicate with your clients, and how often? How often will you receive statements on your investment?  How often does the advisor recommend you meet with them - quarterly, yearly, or more?  Does the financial advisor have other means of communicating with you on a regular basis - email, newsletters, conference calls, webinars?  Tell the advisor what you expect to receive.
  14. Do you receive referral fees from attorneys, accountants, insurance agents, mortgage brokers, or any other 3rd party professional if you refer me as a client? If they do, this is a big red flag.  Maybe the accountant is a good fit for you, or maybe they are referring you to them to make the referral fee.
  15. Are you involved in any other business activity as a sole proprietor, partner, officer, employee, trustee, or agent (other than tax-exempt organizations)? If they are engaged in some other business activity, is there a conflict of interest that will influence their investment advice?
  16. Do you receive any incentives (financial or non-financial) for recommending specific investment products? If they do receive incentives, be sure the product is right for you, and not just for the financial advisor earning a vacation or some other benefit to them.
  17. Finally, and most important, do you feel comfortable with this financial advisor?  Do you think you can trust them?  Do they talk down to you?  Can you feel secure trusting your financial future to this financial advisor?

New Profile Pic 2599R How Can a Woman Find a Financial Advisor She Can Trust?Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

cc smallest How Can a Woman Find a Financial Advisor She Can Trust?Photo Credit – ThenAndAgain

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

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{ 3 comments… read them below or add one }

Mark August 30, 2010 at 10:12 pm

All very good points. I think we all take things for face value too easily in the Internet Age. We should never be afraid to really ask about those handling our finances and investments.
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Golda Smith May 14, 2011 at 4:28 pm

I love the questions that you’ve prepared and will keep this as a reference. What is the minimum that someone should be earning to need the services of a financial advisor?

Golda
Golda Smith´s last [type] ..Making Time Your Slave- Working At Home and Avoiding Distractions

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financialmom May 14, 2011 at 8:47 pm

Golda,
Really good question! There is no minimum you need to be earning before using a financial advisor. Think of it as essential preventative medicine, so you don’t have to learn the hard way how to manage your money!

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