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How to Find and Vet a Financial Advisor

Financial Literacy How to Find and Vet a Financial Advisor

If you’ve been putting off getting a financial life, maybe it’s time to speed date a couple of financial professionals to help you get a solid wealth-building plan in place for 2018 and beyond.

What a Financial Advisor Can Do for You

Simply put: a financial advisor knows how to help you get a financial plan in place to meet your life goals.

A financial planner can help you:

  • Organize your finances (budgeting, planning, saving, investing),
  • Plan for life changes (from starting a family to retiring),
  • Project the results of your savings and investments to see if you’re on track,
  • Make wise investment decisions to build your wealth over time, and
  • Help you protect the assets you’ve built through risk management.

Convinced you could use some help in navigating your financial life?

That’s great. But, unfortunately, you need to be diligent in finding a financial professional who operates under the principle of doing the right thing for you—not them. Acting as a fiduciary means that a financial professional is legally required to act in the best interest of their client.


So, it comes down to you having to do your homework and vetting the financial professional you choose to hire.

Types of Financial Professionals

There are quite a few types of financial advisors you could hire. Here are some professional credentials to understand before you trust a financial planner (or advisor) with your hard-earned nest egg:

Certified Financial Planner (CFP)

A Certified Financial Planner (CFP) is accredited by the CFP Board that governs them professionally. To become certified a candidate must:

1. Complete the university-level education requirement,

2. Pass the CFP certification exam to show financial planning know-how in real life situations,

3. Meet the experience requirement of 6,000 hours of professional financial planning,

4. Pass fitness standards (adhere to a code ethics, rules of conduct, practice standards, and undergo a background check),

5. Receive authorization to use the CFP professional mark, and

6. Complete ongoing continuing education requirements.

Note: A Chartered Financial Consultant (ChFC) offers the same financial planning services as a CFP, but got his (or her) certification through the The American College of Financial Services. These two professional groups compete with each other for market share.

NAPFA-Registered Financial Advisor

The National Association of Personal Financial Advisors (NAPFA) is the professional organization for fee-only financial advisors. To become a member, an applicant must:

  • Have a Bachelor’s degree from an accredited institution,
  • Have a CFP certification,
  • Sign the NAPFA Fiduciary Oath,
  • Earn 60 continuing education credits every two years, and
  • Demonstrate the ability to take a comprehensive approach to financial planning by either submitting a sample comprehensive financial plan or participating in a peer review dialogue.

Fee-only advisors tout the advantage of their compensation structure to their clients (they get paid for financial advice, not for selling investment products) and that all NAPFA members sign an oath to act as a fiduciary for their clients.

To find a fee-only advisor, search NAPFA’s online member database.

Qualified Financial Planner (QFP)

A Qualified Financial Planner (QFP) holds a higher level of financial planning degree than a CFP, for example. A candidate seeking to become a QFP must have three years (or more) professional experience as a financial planner and hold one (or more) of these credentials:

  • Chartered Financial Consultant (ChFC)
  • Certified Financial Planner (CFP)
  • Master of Science with a Financial Planning concentration (MS)
  • Master of Science in Financial Services with a Financial Planning concentration (MSFS)
  • Personal Financial Specialist (PFS)

Their professional organization’s website is undergoing a redesign (good idea) and the QFP Verification Registry of Qualified Financial Planners is not working. But, if you are reading this after April 15, 2018, it might be available to check the credentials of a QFP you are considering hiring.

Registered Investment Adviser (RIA)

A Registered Investment Adviser (RIA) is an individual (or company) paid to provide advice about securities to their clients. Their official job title is spelled adviser (not advisor)—now you know if you’re searching to find one online.

They’re also called:

  • Asset Managers
  • Investment Counselors
  • Investment Managers
  • Portfolio Managers
  • Wealth Managers

They are regulated by the Securities Exchange Commission (SEC) if they manage $110 million or more of client assets—state regulators have jurisdiction over advisers who manage up to $100 million.

Before you choose to invest, it’s good to check that your preferred adviser is legit by using FINRA BrokerCheck or the SEC’s Investment Adviser Public Disclosure Database. If you don’t find the adviser’s (or their firm’s) name listed, investigate further before you use their services.

Certified Public Accountant (CPA) & Personal Financial Specialist (PFS)

Sometimes the tax consequences of a financial decision determines what you should do with your money. So, it’s good to have a CPA on your wealth-building team. Some CPAs are also certified by their governing professional board (AICPA) to assess your overall financial situation and provide advice on budgeting, planning, saving, and investing. Your CPA will have the PFS credentials added to their name to show that they are a certified Personal Financial Specialist, if this is the case.

What Types of Fee Structures Should I Expect?

Financial professionals are typically paid using one (or more) of these fee structures:

  • Hourly fee,
  • Flat fee,
  • Commission on investment products they sell you,
  • Percentage of the value of the assets they manage for you, or
  • Combination of fees and commissions.

Be sure to understand the costs associated with the financial advice you receive. If an advisor (or planner) cannot clearly explain what you will pay for their services, that’s a red flag. Get their fee structure in writing and mull your options over before making a commitment. If they ever try to rush you into a quick decision, walk out. There is no reason to do so as timing the market is not a suitable investment strategy for most people. It takes time to do good planning. Make time to do due diligence and vet your prospective advisors.

How to Vet a Financial Advisor

Interviewing a financial advisor is not that different from what you would do before going on a first date. Check out their website and social media profiles. If you can’t find a clear message about who they are, what services they do (and don’t) offer, and what they charge for their services, don’t schedule an initial appointment.

Work your network. Talk to people whom you trust to see who they use for financial advice and ask them for a referral.

Before you hire a financial professional:

  • Prepare your checklist of interview questions,
  • Clarify the services you need (goal setting, cash management and budgeting, tax planning, investment review and planning, estate planning, insurance needs, education funding, retirement planning),
  • Clarify compensation for those services, and
  • Ask for references and check them.

Consider a Hybrid Approach of Robo-Advice vs. Human Advice

If you’re still on the fence about whom to hire, consider doing a beauty contest. Data doesn’t lie. A beauty contest is where you take part of the money that you wish to invest in stocks and bonds and invest it based on the advice of an automated investment service (robo-advisor) that uses an algorithm to trade funds. You take the other part of your investment dollars and invest it based on the advice of a human professional. After a period of time, compare the results (your gains and losses) vs. the cost (fee structure). See what works best rather than wondering if you made a good decision.

Wishing you much abundance on your road toward having a great financial life.


Kate Thomas is Director of Inbound Marketing at Quotacy, where she is happy helping one million people protect their loved ones with the gift of life insurance. Her writing has had audiences in the art, academic, and advertising worlds. She lives in Minneapolis, where she enjoys meditating, making snow angels, and supporting the vibrant arts community. Connect with her on LinkedIn.

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