This is the fourth part of a six part series to help simplify your search for a financial advisor.  Our third installment discussed What Types of Financial Advisor Fees Should I Be Aware of?

So you’re ready! You’ve thought through if you need a financial advisor and you know a little more about how they charge you. Now it’s time to begin your search for one. But what sorts of things should you look for in an advisor?

Online presence

The internet can tell you about a financial advisor and unearth potential red flags pretty easily: (It’s also important to know that not all financial advisors are a fiduciary)

  • Google: It seems basic, but you never know what you’ll find. Google the advisor’s name and dig through the search results.
  • The advisor’s website: In addition to the official information listed on the advisor’s site, what’s the vibe? Does it feel professional and polished? Does it instill trust in you? This is one indication of how the financial advisors see themselves since it’s the public face they put forward.
  • LinkedIn: This is one of the easiest ways to learn about the advisor’s job history.
  • Twitter: You also can gain a sense of the advisor’s personality and how they present themselves here. Are their tweets professional? Does she do anything that makes you uncomfortable?

However, don’t be surprised if you don’t find a lot on social media, because historically the government has not allowed advisors to be very active on sites like Facebook, Twitter, and LinkedIn.

Complaints and compliance

All the advisors listed on GuideVine have been screened for compliance, criminal and regulatory issues. If you want to check this for yourself or if you want to research advisors not on GuideVine, here’s how to find out whether the financial advisor has any complaints or regulatory issues:

  • Visit the Securities and Exchange Commission (SEC) IAPD website and search for the advisor’s name or firm.
  • Registered Investment Advisers (RIAs) are required to file a disclosure that lists potential conflicts of interest and past disciplinary infractions, called a form ADV.
  • Most RIAs that manage less than $100 million in client assets are registered with a state securities regulator, though some have the option of registering with the SEC instead. For a list of state securities regulators and who to contact there to find out more about your RIA, visit the North American Securities Administrators Association’s directory.
  • The Financial Industry Regulatory Authority (FINRA) is an independent, self-regulatory organization. FINRA’s BrokerCheck database keeps track of employment history, certifications, licenses, regulatory actions, violations or complaints against broker-dealers.
  • You can run a check for a criminal record or other potential ethical issues through resources like BeenVerified, Instant CheckMate, and Intelius.

Fiduciary and potential conflicts

Ask the financial advisor whether they are a fiduciary — someone with an ethical and legal obligation to act in your best interest rather than their own. By definition, Registered Investment Advisors (RIAs) are fiduciaries. In practical terms, this means they are legally required to act in the best interests of their client’s financial needs rather than taking into account any commission or personal gain.

All the advisors on GuideVine are fiduciaries. That doesn’t mean that non-fiduciary advisors are bad. People who work with non-fiduciary advisors typically do so because they’re looking for certain types of investments or asset classes that are only available through those types of advisors.

References and client relationships

If a financial advisor passes all of the above steps, you might ask them for some client references. It’s rare for anyone to provide references that are anything but positive, but if you ask the right questions, these calls can still be very helpful. Try to ask for one long-term client and one newer client, so you can try to assess the advisor’s approach to new clients. When you get each client on the phone, ask:

  • How long have you been with the advisor?
  • What do they do for you: financial planning, investment management, other services or a combination of things?
  • Have you ever had a problem with them? If so, how was it solved?
  • Are they responsive to your phone calls and e-mail?
  • Is there anything about them you would change if you could?
  • How often is in touch with you?
  • Are you happy with your portfolio return?

Of course there are many more questions you should ask when interviewing your future advisor.  In our next post we will go through:

5 Key Areas to Consider When You Interview Potential Advisors


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GuideVine

From time to time, the team at GuideVine highlights certain topical videos and content from expert financial advisors. We find these helpful and hope you will to for your managing personal finances. To learn more, you can view and find potential advisors through our advisor matching service and listings, ask one-on-one personal finance questions to these experts, and view “How to” videos on our YouTube channel (https://www.youtube.com/channel/UCJopbGDSgc1szGZaoUPqTrA).