Written by: Zac Beckerley, CFP®, Wealth Manager
According to the U.S. Bureau of Labor Statistics, there were more than 263,000 personal financial advisors in America as of May, 2021. Their clients included individuals and families working to secure their financial futures, as well as high net worth investors with complex planning requirements. What services do these advisors provide? What qualifications do they have? How do you know when you might benefit from their advice? And how can you find an advisor who’s a good fit for you? The answers to these questions could make a significant difference to your financial situation in the years to come.
More than investment management
Let’s begin with a quick look at the role advisors play in their clients’ financial lives. While the specifics may vary depending on the goals of a given client-advisor relationship, the greatest value in having an advisor comes from their ability to give you an objective view of your whole financial picture, accompanied by specific recommendations tailored to your objectives. This involves looking at your assets and liabilities, cash flow and tax situation, as well as your insurance coverage, short-, mid- and long-term goals, estate considerations and more.
With the big picture of your situation and needs, your advisor can suggest opportunities you might not have noticed, address risks you might not be aware of, and offer a professional perspective on decisions you’re considering that may not be in your best interest. For example, is your investment mix too conservative or risky for your goals and risk tolerance? Is it weighted too heavily in one investment? Does your insurance protection include an umbrella policy appropriate for your net worth? And—especially in times such as the bear market we’re now experiencing—are you tempted to make changes to your investments that experience suggests you may come to regret?
Qualifications and credentials
The titles “financial advisor” and “financial planner” do not by themselves tell you much about the qualifications of the individuals who use them. Many people think they imply certification of financial expertise. But this isn’t necessarily the case. Fortunately, there are a number of credentials issued by recognized industry organizations that attest to an advisor’s professional competence.
Widely considered the standard of excellence among these credentials is the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation issued by the CFP Board. Along with meeting demanding formal-education requirements, CFP® professionals must pass a rigorous exam that covers more than 100 financial planning topics. And they must have thousands of hours of industry experience before certification. Just as important, they’re required to follow a code of professional conduct that includes a fiduciary duty to their clients. This means they must act in your best interest at all times when they’re providing advice. Many people don’t realize, for example, that uncertified, non-fiduciary advisors and planners working for financial institutions may be free to recommend their own firm’s investments—even if those from a competitor would be a better fit for your needs.
Is it time to speak with an advisor?
A change in someone’s life situation often is the nudge that starts them thinking about the value of seeking professional advice regarding their finances. It could be a raise or promotion at work, or a change of jobs. Sometimes it’s a marriage, a divorce or an inheritance. Or the arrival of a new child and the need to start saving for college. Or perhaps the uncertainties of today’s investment landscape have left you feeling disoriented and wishing you had an experienced guide to help you navigate the path from here.
In fact, there’s no need to wait for a special event. Whether you’re just starting out in your career, or you’re nearing—or even in—retirement, an advisor’s assistance can prove invaluable at any stage of life. This is true regardless of how involved you may currently be in your own financial planning. For those with no plan and no investing knowledge, an advisor can help you create a strategy and implement the details. For others who may have spent years managing their own financial matters, partnering with an experienced advisor can free up time for other priorities—as well as provide an outside opinion on strategies to enhance returns and manage risk.
How to find the right fit
Choosing a financial advisor involves more than finding someone with the expertise and professional qualifications to provide the services you’re looking for. It’s equally important that the advisor you choose is a good personal fit for you. You should feel that the advisor is on your side—working with you, not just for you, and certainly not against you. A sense of trust and the ability to communicate clearly are essential. Ask yourself whether the advisor you’re interviewing is someone you’re confident would tell you what you need to hear, even if they knew you’d rather not hear it.
Even your first interactions with a potential advisor can give you a sense of what’s in store. Do they proactively suggest things to consider or do they merely react to your questions? Can you easily reach them by a direct phone number, or are there layers of staff separating you from them? Do they respond quickly to your inquiries on email or voicemail, or do they take days to get back to you?
For a more formal assessment, seven key traits we emphasize at Merit Financial Advisors provide good criteria for your advisor-search checklist:
- Competence – Appropriate education, certifications and professional experience
- Objectivity – Realistic assessment of your goals, resources and commitments
- Integrity – Honesty and professionalism you can always rely on
- Clarity – Clear explanation of services, costs, risks and potential conflicts of interest
- Diligence – Reasonably researched recommendations and closely supervised staff
- Compliance – Qualified and licensed as required by state or federal law
- Privacy – Confidential treatment of personal information
Where to start your advisor search
You may already have friends who speak highly of their own financial advisors. If so, that’s certainly a way to begin the search for one of your own. You also can enter “financial advisors” and your location into a Google search to generate numerous possibilities in your area.
To screen for advisors who are CFP® professionals, the CFP Board’s own website offers a tool that lets you search a specific radius around an address or city, as well as by the types of planning services offered and the last name of a planner you already may be interested in. You also can visit BrokerCheck to see whether an advisor or firm meets legal registration requirements and has experienced regulatory actions or complaints.
With these resources to help, if you’re ready to take advantage of a professional’s insights to improve your financial picture, there’s no better time to begin than now.
Reach out to one of our advisors today to learn more about financial planning and/or to begin your financial planning journey. Contact Merit Financial Advisors today!