When you’re shopping for a high-ticket item, like a house or car, it’s usually not too difficult to use screens and filters to find suitable fits.
But when looking for a financial advisor – someone who will know intimate details about not only your finances but your life – it’s not always easy to know where to start. The problem isn’t finding any advisor, it’s finding the right one.
Whether you’re a young professional, a retiree, a business owner or facing specific financial challenges, your situation requires tailored expertise.
For example, a retiree may require income-focused strategies, while a business owner seeks guidance on succession planning. In contrast, a young professional might prioritize wealth accumulation.
Here are some things to keep in mind as you search for the right financial advisor for your needs:
Before you begin your search, it’s important to consider why you need a financial advisor in the first place.
Clark Richard, co-founder and CEO at Colorado-based Vineyard Global Advisors, says prospective clients should list the reasons they’re looking for an advisor.
If you’ve previously worked with an advisor but want a change, knowing what you didn’t like about your prior experience will prevent you from re-creating that, Richard says.
“Once you have narrowed down your list of candidates, set up a time to interview each one,” he says. “The time you spend vetting and asking questions will get you closer to finding a financial advisor who offers the products and services you desire.”
Whatever a particular investor’s needs or desires, finding the advisor best qualified to address them is critical.
“You will want to know about their background, their expertise and if they often work with clients in similar circumstances to yours,” says John Diehl, senior vice president of applied insights at the Hartford Funds.
Diehl says it’s also important to understand whether the advisor specializes in any particular areas of planning, and how their business is structured. For example, is the advisor a solo practitioner, or do they work as part of a team?
“It never hurts to ask friends or family members if they are working with a financial professional and, if so, what lessons they have learned, both positive and negative, in the process,” he adds.
While prospective clients are often counseled to ask an advisor for their credentials, that’s unlikely to reveal the full picture of the advisor’s approach or suitability.
Credentials demonstrate an advisor’s technical knowledge and adherence to industry standards, but they don’t reflect personal rapport, communication style or alignment with your financial goals.
Asking for credentials is not the first thing a client should focus on, says Evan Drury, an advisor at U.S. Financial Services in New Jersey. For instance, you should also inquire about whether an advisor is a fiduciary.
Drury says prospective clients should also focus on an advisor’s menu of services.
“When you work with a planner, you should be getting a soup-to-nuts financial planning breakdown of not only your life today but what that looks like throughout your life,” Drury says. “Investments are just included in all of that.”
The advisor’s services should be comprehensive and include cash flow, growth rates on investments, inflation, taxes, estate planning and income planning, among other considerations leading up to retirement.
“So when you try to find a great advisor/planner, go beyond the title and credentials and look at the service beyond the portfolio,” Drury says.
If an advisor is willing to talk openly with you and answer questions about your unique situation, that’s a good sign. Also, determine whether the advisor is able to explain complex financial concepts in a way that resonates with you. It’s this personal connection and shared vision that ultimately determine the right fit.
Many would-be clients are seeking an advisor with similar characteristics, such as gender, race or sexual orientation.
For example, Allianz Life’s 2023 Annual Retirement Study found that 23% of Black Americans said they would be more likely to work with an advisor with similar characteristics.
Meanwhile, asset management and advisory firm LPL Financial has thrown its support behind the National LGBT Chamber of Commerce and the LGBTQ+ advisor business community. These efforts are designed to help members of the LGBTQ community connect with advisors.
Choosing a financial advisor who shares similar characteristics and values can be advantageous, as they may better understand not only your financial goals, but also your personal situation. Ultimately, the selection of an advisor should come down to a balance of expertise and the chemistry you have with that individual or firm.
Frequently, clients select an advisor because they’re a family member or friend, but that’s not always a great idea. Just because you know the person doesn’t mean their specialization or business model is a good fit for you.
“Working with someone you already know and trust can be a benefit, but can also be a drawback if they don’t possess the qualities needed to be a successful advisor for your specific situation,” says Tylor Willis, managing partner, senior vice president and senior wealth advisor at UMB Bank in Kansas.
“When selecting your financial advisor, remember to look for more than just money smarts,” Willis says. “Pay attention to your comfort level and how you connect with them.”
Although many people believe finances are purely logical, or at least believe that’s true in their case, emotions play a big role in financial decision-making.
That’s why investors should focus on not only an advisor’s technical chops but also their softer skills.
“A great financial advisor will listen more than they talk,” says Willis, noting that an advisor should be adept at asking thought-provoking questions to understand a client’s financial goals and then provide appropriate solutions.
Willis also points out that today’s economic market, with concerns including inflation, recession and geopolitics, can heighten investor worries.
That’s why communication and personal connection with an advisor are so important.
“Having an unbiased resource to help you navigate through tough market cycles or life events to temper quick or rash decisions is often the difference between successful and unsuccessful investment outcomes,” he says.
U.S. News makes no representations or warranties in connection with the information provided herein, nor to the accuracy or applicability thereof. U.S. News does not give, offer, or render tax, credit, or legal advice. Before making financial or investment decisions, U.S. News recommends that you contact an investment advisor, or tax or legal professional.