Many financial advisors are out there, but finding the right one can be difficult. Do you screen them based on their credentials, or do you look more at their personality? Should you put your faith in their experience and keep an eye on their track record of success, or is it better to work with someone who’s new and hungry for the chance to impress?
There are so many ways you can judge whether your potential advisor is the right advisor for you that it can be hard to decide which benchmarks are the right ones to use. If you’re not sure what qualities your financial advisor should have, here are a few tips for what you should look for.
A shared interest in your financial goals
Like many industries, some financial advisors cater to specialty (or “niche”) clients, so the first thing you should do is ensure you’ve found a potential advisor who can help you achieve the goals you want. If you wish to consolidate credit card debt and become debt-free, save for retirement, or plan for your kids’ education, you’ll need to find an advisor who is experienced in handling these goals for their clients. You won’t necessarily need to find a niche financial advisor who specializes in your financial goal, but they should have some experience getting the results you want.
Critical thinking about analytics, risk, and planning
There are lots of moving parts to finance, and you’ll need an advisor who can juggle those parts accordingly. Look for a financial advisor who can show you how they’ll structure a financial plan similar to the one they’d create for you, and keep an eye out for signs of analytical thinking. You should notice parts of their example plans that include considerations for taxes, cash flow, reallocation over time, and competency with estate planning and investment management.
A passion for finances
It might sound odd, but having a financial advisor who’s passionate about finance can only do good for your finances. Being a “nerd” for finance means they’ll be up-to-date with the latest products, services, and regulations that can affect your financial goals, and their enthusiasm will only further improve their dedication to finding the right tools for you. On the other hand, a financial advisor who’s bored or uninterested in finance can make it difficult for you to reach your goals, get a hold of them, or have the latest options for products and services available.
The bottom line
Looking for a good financial advisor is like looking for a good mechanic. You can hire a repairman and pay him to fix your car, but if you don’t know what he’s doing, you’ll never know how well the job was done or if you’ve overpaid for horrible advice. If you’re ready to hire a financial advisor but aren’t sure how to vet them, use these three qualities as benchmarks for whether they’re the right advisor for you.