Suzanna de Baca

How to Select a Financial Advisor
January 22, 2007

Dear Suzanna: I’ve owned a successful contracting firm for ten years.While I understand business finance, I’m not always confident about my personal investments and am thinking about hiring a financial advisor.What are the most important things to consider?

--From “J.P. in California”

Dear J.P.:

Trying to figure out what to pay for financial advice can be a Catch 22.If you pay too much, how do you know?On the other hand, if you pay too little and don’t get the right advice, you could end up losing a lot more in the long run.

Going with the low cost provider for services involving your money isn’t always the right answer, but getting the right value for these services can make a big difference to your bottom line. Here are four critical factors for you to consider as you shop around:

1. What service are you looking for?
   Financial Advisors come in a variety of shapes and sizes, so you need to first ask yourself if you need help with the whole picture or just a part of it.A Financial Planner can help you with long-term strategies for specific goals, such as retirement or education, or with a comprehensive look at your total financial and investment picture.Some advisors may only analyze or provide advice on investments, while others only have expertise in insurance.

2. Business rating and professional credentials.
   Ask the individuals or firms that you’re considering about their educational or professional credentials, such as a degree in finance or business, a Certified Financial Planner or Registered Financial Planner designation, the appropriate Securities and Insurance licenses.

3. Client Service and Reputation.
   Responsiveness, accuracy and quick turnaround on any financial services are crucial.Don’t be afraid to ask for client references and interview those people to see if they have been satisfied with performance.Factor the quality of service into your cost analysis.

4. Cost comparisons.
   Shop around and compare equivalent services.Planners generally have either an hourly fee or charge a flat fee for specific services. Costs vary widely depending on the experience of the professional, the geographic region, and the scope of services. Investment managers or insurance professionals may do planning free in hopes that you will purchase the products they recommend or utilize their fee-based services into the future. That isn’t necessarily negative; just be sure it is disclosed up front.For money management, call several firms to ask about transaction costs, fees for managing assets, and other costs.Your Chamber of Commerce can give you an idea of average costs for these services in your area.

PAS is a member NASD, SIPC.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.

Posted by Suzanna de Baca on January 22, 2007 | Comments (0)