Six Factors for Evaluating a Current or Prospective Financial Advisor

Kirk Fricke, CLU®, CFP®, May 25, 2021

Where do you get your financial advice? If it’s from a person, is he or she the ideal professional for your needs? If not, your financial plans could lay stagnant, and you could miss opportunities to reach — or exceed — your goals. The six factors below can help you evaluate your current relationship or choose a new financial advisor.

 

Six Factors for Choosing a Financial Advisor

 

1. Education and experience

Certifications show that an advisor has a baseline education and passed an exam on a broad range of financial planning topics. But that’s just a start.

While years of experience matter, you really want a financial advisor who can show focus, effort and commitment to the field and to their clients. This might include authoring educational and thought-leadership content, pursuing continued education, and keeping up with relevant trends.

It’s also a good idea to confirm an advisor’s credentials and check for any complaints or regulatory issues filed against that person. You can do this through FINRA’s BrokerCheck and the SEC’s Investment Advisor Public Disclosure.

2. Services and specialties

Your financial life is complicated, and the planning services you’ll need over time will be varied. So look for an individual financial advisor with well-rounded knowledge or a team of specialists who can work closely together to keep your plans aligned. Either approach is fine, as long as you get the assistance you need in the areas of particular interest to you.

3. Fiduciary versus “best interest”

Registered investment advisors — as well as bank trust and asset management advisors — are held to a full fiduciary standard, whereas broker/dealers are held to a “best interest” standard. While these standards are similar, a true fiduciary standard also carries the duty of loyalty and care. As payment for these ongoing obligations, investment advisors typically charge an ongoing fee, which is assessed monthly or quarterly. Broker/dealers, on the other hand, are usually compensated on a trade-by-trade basis. 

4. Fees and focus

Make sure you understand the advisor’s fee structure upfront, such as market value-based fees or commissions. Realize that what you pay and the size of your investable assets may influence your advisor relationship. Ask how often the advisor will meet with you (annually, semi-annually, quarterly), as well as which services are included in the basic fees and what is extra.

5. Connecting and communicating

Ask prospective financial advisors about their experience working with clients similar to you in terms of wealth, life stage and financial goals. You may also want to consider whether an advisor can relate to your cultural history and daily life. That could mean having children (or grandchildren), having a passion for travel or keeping up with cutting-edge technology. Having commonalities can help ensure your advisor understands you, which may help them develop strategies uniquely tailored to your life.

6. Personality and style

Ideally, you should like your financial advisor, at least to the extent that you feel comfortable discussing your personal financial affairs. That said, don’t choose “likeable” over “competent.”

But do find someone who can clearly explain their recommendations and is transparent about what they are suggesting and why. Make sure they are also willing to offer new and personalized ideas, rather than simply giving you the same cookie-cutter advice they give everyone else.

Be sure to get a sense of whether an advisor’s investment style aligns with yours, too. Are they a risk taker, conservative or flexible enough to suit your approach and risk tolerance?

Worth the effort

Once you evaluate a prospective financial advisor against these six factors, you’re well on your way to finding the right person for your needs. While it may seem like a long journey, consider that you’re putting a good piece of your current and future financial wellness in this person’s hands. It becomes clear that choosing the right person is crucial. 

If you would like to learn more about Hancock Whitney’s approach to financial planning, contact us today. Our team is ready to help you achieve your financial goals.

 

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The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

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