Over many years in the Financial Services Industry, I have been quite amazed at how cavalierly some people select–or have been assigned–a Financial Advisor. Sometimes, it seems to be the Luck-of-the-Draw. But, do some work before agreeing to work with a particular person. Keep in mind that it is that particular FA who you will be looking to for guidance–not the Firm. A number of Mutual Fund Companies and Securities Firms have brochures that you might read, regarding how to Select a Financial Advisor. Here are a number of points that I would suggest that you consider in selecting a FA:

1. What are the FA’s Credentials–academic and work experience? Some foundation in Accounting (for understanding financial reports), Economics and Finance should be included. The FA should be willing to send you a biographical sketch. Discuss it with them in detail. How might his or her background fit your needs?
2. Be cautious of relatively new FAs. For instance, someone who graduated from college and entered the financial markets two or three years ago might lack proper perspective. Monday, March 9, marked the third anniversary of the market bottom for most Developed Market Stock Indices. Some new FAs might think that their advice has been stupendous in view of how their clients‘ portfolios have done over the last few years. There is an age-old maxim in the financial markets: A Rising Tide Lifts All Boats. So, a good bit of the performance, since early 2009, was probably due to the markets, in general.
3. What types of clients does the FA cater to? Minimum size and type account(s) preferred, if any? Does the size of your account(s) fit that Business Model?
4. Are there particular investment products and services that the FA has valid expertise in? How about ones that he or she avoids due to lack of a working knowledge? Does this fit with your anticipated needs and preferences?
5. Did the FA Interview you to gain knowledge as to your Investment Profile–Age, Expected Retirement Plans, Financial Resources, Risk Tolerance, etc? Did they ask follow-up questions and encourage you to ask questions, as well? It is very important that you both take the time to go through this process in detail; because, it will set the stage for any investment recommendations that the FA will provide–both at the onset, and along the way. Your relationship, in the early stages, will be somewhat of a learning experience for each of you.
6. What does the FA expect of his or her clients–returning Email and telephone calls, face-to-face meetings, being realistic about anticipated performance, etc?. The CFP (Certified Financial Planner) Designation is nice to have; but, it doesn’t compare to years of real-world experience. Just think of what both FAs and investors have learned from; the Dot-Com Bubble bursting (2000); the World Trade Center attacks (2001); entering two Wars in the Middle East (2003) and the so-called Great Recession (2008-2009). Experience does count!
7. Do you wish to focus your Financial Plan somewhat on Insurance Planning? If so, make sure that the FA has the appropriate Insurance Designations and experience. For Tax and Estate Planning assistance, your FA cannot generally offer such advice (even if they have the required credentials); however, make sure that they understand the subject matter. They can be invaluable in explaining and reviewing your needs when you meet with a CPA or Attorney.
8. Let the FA know if you have special communications preferences, speaking in the early morning before your work day begins or after the close of business, will the FA be available at that time? Do you prefer to receive investment calls at home, at your workplace, cell phone, etc. Do you prefer communication through Email?
9. Is the FA capable and willing to provide securities analysis from Standard and Poor’s and other analytical firms, Morningstar reports (Portfolio Snapshots and Securities Detail Reports), market letters (from their Firm, outside research and mutual fund companies)–and educate you as to how to review them. At first, they might appear to be in a foreign language; but, after you have seen them a few times, and with a little guidance from the FA, the smoke will start to clear. I believe the FA should want to provide them; because, the reports–when reviewed with him or her–will show the rationale in any investment recommendations that they may make. Always ask questions!
10. How independent are the investment recommendations, which the FA makes, from influences of their Firm? Are they encouraged to focus on either their Firm’s Securities Inventory (for Individual Stocks and Bonds) or its Proprietary Mutual Funds? Are they permitted free access to deal with a wide range of different Mutual Fund Companies and Annuity Products offered by a number of major insurance companies?
11. Will the FA provide a detailed and specific proposal as to how they would suggest investing your money initially, or how they would recommend re- shuffling an existing portfolio? Review it with them and discuss how often you might expect to review it with him or her–in person or by telephone.
12. Lastly, if you ever find that the FA is not returning your phone calls, not giving complete answers to your questions, adequately explaining the markets or your portfolio’s performance, or just acting in your best interests, let the FA understand that you need a quicker response, more clarification, etc. You need to both be on the same wave-length. However, if you are still not satisfied, ask to speak to the Firm’s Resident Manager.


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  1. #1 by Marissa Huber on July 10, 2012 - 12:38 AM

    Good advice, Cheeks! I’ll have to use this to find a new one, since my existing FA had the audacity to retire!!! 🙂

  2. #2 by cheekos on July 10, 2012 - 12:50 AM

    He’s probably over-the-hill, n’est-ce pas?

  3. #3 by Mauricio Groshaus on July 11, 2012 - 6:43 PM

    Now, at 81, reading Chosing Financial Advisor (FA), I realize how many mistakes I made. But I got some very good ones.

  4. #4 by cheekos on July 11, 2012 - 7:30 PM

    Muaricio, when I first started, at (then) FNCB (now Citi) in 1973, the CEO was the widely-revered Walter Wriston. As he did every quarter, he adressed the new Employees in a Familiarization Orientation. He said that, if you are a lending officer and have never made a bad loan, you’re just not doing your job. Well said–both you and Walter.

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