Hiring a fiduciary financial advisor can be a worthwhile decision, as they can help you develop and implement a financial plan that aligns with your goals, risk tolerance and personal preferences. Below are seven things to consider when hiring a financial advisor:
Qualifications
- Look for a financial advisor who has the qualifications and credentials relevant to your financial situation, such as Chartered Financial Analyst (CFA), Certified Financial Planner (CFP) or Registered Investment Advisor (RIA) designations. These best-in-class designations require rigorous training, education, and ongoing professional development, and tend to indicate that the advisor has deep knowledge and an appropriate skillset to partner with you as work towards your financial goals.
Fiduciary
- A fiduciary an advisor who is legally obligated to act in your best interest. Fiduciaries offer the best products to suit your individual situation, rather than those that simply pay the highest fees or kick back the largest commissions.
Experience
- Review the advisor’s experience over a variety of market environments and verify the advisor has clients like you. We’ve been writing The Prudent Speculator since 1977 and have been managing wealth for just as long. There have been exciting ups and trying downs over those 45+ years, and we’ve learned through each experience.
Philosophy
- Examine the advisor’s investment philosophy and consider your own viewpoints and beliefs. For more than four decades, we have been guided by three key tenets: Patience, Selection, Diversification.
Goals
- Does the advisor select an investment strategy or allocation that is tailored to your situation? A simple 60% equity / 40% bond fund portfolio is easy to implement, but it may create a false sense of diversification (a process by which one seeks to reduce risk). Consider whether your financial situation requires an approach tailored to you.
Trustworthiness
- Consider the advisor’s reputation and trustworthiness. Look for an advisor who is transparent, ethical, and has a track record of putting clients’ interests first. We recommend asking for a GIPS Report for any strategy you are considering.
Investing Like You
- A chef that refuses to eat their own food would set off red flags. The same principle applies in finance. Does the advisor invest in the same investments you do? If not, why?
The key to success in hiring a financial advisor is to find someone has the experience and expertise to help you achieve your financial goals.
