Finding a financial advisor isn’t easy. Many people who work at brokerage firms now call themselves “financial consultants”: they’ll invite you to seminars on retirement planning, long-term care, and other topics. Some of these financial consultants are truly financial planners, with valuable insights to offer, but others are merely looking for an excuse to sell you something. How can you find a truly trustworthy advisor?
Ask your friends, work associates and relatives if they use a financial advisor.
Speak with your other professional advisors such as your attorney or accountant and ask whom they would recommend. (Special Note: If you’re a federal or postal worker or annuitant, seek advisors who have worked with federal retirees because these advisors are likely to be familiar with issues that you’ll face, such as making decisions about federal retirement benefits.)
Come up with a list of three financial planners and arrange personal interviews with each one. These should be get-acquainted interviews, with no cost or obligation to you. You’ll get an idea if you feel comfortable enough with any of these planners to pick one. Rather than pay someone via sales commissions, you might prefer paying on the basis of assets under management. For very small accounts, that percentage might be as high as 2%, but investors with large portfolios probably will pay around 1% of assets per year, plus expenses and transaction costs. With a $1 million portfolio, for example, you might pay $10,000 per year.
Insight: The advantage of this approach is that it gives your advisor an incentive to perform well. The more your assets grow, the greater the advisor’s fees.
If you’d prefer another arrangement, some financial planners are willing to advise clients on an hourly basis. Financial planners might charge anywhere from $75 to $400 per hour, depending on their geographic location and the extent of their experience, but the norm is around $200 per hour.
Another approach is to seek financial planning services through an accounting firm. The American Institute of Certified Public Accountants awards a personal financial specialist (PFS) designation to CPAs who are qualified as financial planners. By combining tax preparation with a financial planning engagement, you might be paying enough in fees to be a welcome client for the firm.
You can find a listing of CPAs in your area who have earned a PFS designation by going online to Other organizations to contact for leads to financial planners include the Financial Planning Association (FPA), at and the National Association of Personal Financial Advisors (NAPFA), at www.fpanet.org, and the National Association of Personal Financial Advisors (NAPFA), at www.napfa.org.
