Choosing the right financial adviser for your unique situation is not an easy task. Recommendations from a friend or business colleague can be a good source, but remember the right adviser for one person may not be a good fit for your needs.

1. 7 Steps To Evaluate A Financial
Adviser | Graham Cleveley
Brighton
Choosing the right financial adviser for your
unique situation is not an easy task.
Recommendations from a friend or business
colleague can be a good source, but remember
the right adviser for one person may not be a
good fit for your needs. Here are seven steps to
take in evaluating either a new financial adviser
or one with whom you’ve been working for a
while. (For more, see: Shopping for a Financial
Advisor.)

2. Understand How Your Adviser
is Paid
 While adviser compensation may not be as
important as their competence, it's imperative
that you understand all forms of compensation
that your adviser would receive as a result of
working with you as a client. There are several
forms of adviser compensation including various
types of sales commissions from the sale of
financial products and various types of fees.
 Commissions can include commissions paid on
the front-end, commissions paid if your sell the
product during a period of years known as the
surrender period, and ongoing trailing fees. Know
that in all cases the costs of these commissions
are born by you the investor and they serve to
reduce your returns.

3. Understand Any Conflicts of
Interest
 This is very much related to the adviser’s compensation
method. If your financial adviser is paid via
commissions on the investment and insurance product
he or she sells to you will this influence the choice of
financial products they suggest to implement their
financial recommendations?
 Along these same lines, if your adviser is an employee
of a financial services firm that also offers financial
products for sale, he or she may be incentivized (or
possibly required) to give preference to the firm’s
financial products over others in making
recommendations to you. While this has been widely
discussed in terms of traditional brokerage firms and
wire houses, firms like Fidelity Investments and The
Vanguard Group also offer financial advice. This is not
meant to say that every recommendation made to a
product offered by the adviser’s firm is a bad one, but at
the very least you should ask questions here.

4. Does This Adviser Work With
Other Clients Like You?
 Is your situation typical of the adviser’s
client base? For example if you are a
corporate employee looking for help
planning for the exercise of your stock
options, you should ask the adviser
about their knowledge and experience in
dealing with clients like you. A financial
advisor who deals primarily clients at or
nearing retirement might not be a good
choice for you if you are a 30 year old
professional looking for a financial plan.
(For more, see: What Type of Person
Needs a Financial Advisor?)

5. What Services Does the
Adviser Offer?
 While this might seem obvious you should
understand the services your financial adviser
does offer and those they might not offer. For
example most advisers offer advice on financial
planning and investments. Retirement planning
advice is also pretty common. However if your
advice needs include very specific tax advice or
perhaps business succession advice you will
want to know if your adviser has expertise in
these areas. Likewise, if your adviser is really
only focused on the sale of annuities he or she
might not be able to offer the full spectrum of
financial advice that you need. (For more, see:
How to Create a Business Succession Plan.)

6. How and How Often Does the
Adviser Communicate with
Clients? It’s important for clients and perspective clients to
understand how their financial adviser
communicates with clients and the frequency of
those communications. How often will you meet
to review your portfolio and your overall
situation? Quarterly, semi-annually, annually, as
needed? Will these meetings be done in person
or perhaps over the phone or via Skype or a
similar online service? It's becoming more and
more common for clients to work with their
financial adviser remotely either by design or
based on the client relocating to another area of
the country for job transfers or possibly
retirement. (For more, see: Why Clients Fire
Financial Advisors.)

7. Is the Adviser a Fiduciary?
 An adviser who acts in a fiduciary
capacity towards their clients agrees to
provide advice and guidance that is
solely in the best interests of the client.
This is compared to suitability standard
that is employed by advisers who work
for broker dealers and other firms that
sell financial products. The suitability
standard means only that the products
suggested must be suitable for the client.
(For more, see: What You Need to Know
about the Fiduciary Standard.)

8. Check on Professional
Certifications and Training
 Designations such as the CFP and many others are
both a sign of an adviser’s commitment to their
profession and most also require a significant amount of
continuing education. As you might suspect there are
numerous designations available to financial advisers
and some are more meaningful than others. For
example the CPA designation is the gold standard in the
accounting profession but doesn’t in and of itself qualify
an adviser to provide advice in areas such as
investments and financial planning. Please note that
that there is an excellent financial planning designation
offered within the CPA community, the PFS designation.
(For more, see: Why Financial Advisors Need to Earn
Their CFP Mark.)
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-steps-evaluate-financial-adviser.asp#ixzz3YfUophG6