Eleanore Szymanski on How to Choose A Financial Advisor

Naturally, everything she says makes sense…


She does preface with a caveat – that there are advisors who could be perfectly well qualified but who won’t fit the criteria she lists — but because a lay person may not be able to evaluate and select one who doesn’t fit her criteria, these are a great starting point.

And she also points out that criteria aside, you need to be comfortable communicating and sharing personal information with your advisor and that it needs to be someone who really understands you and what’s going on with you.

Her criteria, in short:

1) Find an advisor who has the CFP designation.  For more information, please visit <http://www.cfp.net>  CFP stands for Certified Financial Planner, and getting the designation is a pretty big deal.

2) Get some brochures from NAPFA, the National Association of Personal Financial Advisors.  Unlike CFP designees, NAPFA members must work on a fee-only basis and get no commissions for sales of financial or insurance products.  Please visit <http://www.napfa.org> for more information.  NAPFA provides some great material to help you vet the planners with whom you are considering working.  Go to their web site (make sure you’ve got it toggled to the “Public” view – they use the same site for NAPFA members and professionals, too, but the information you’re looking for right now is meant for the general public) and look for their “How To” guide called “The Pursuit of a Financial Advisor Field Guide”.

While we’re at it – if you are interested in working with a Fee-Only advisor who is a current member in good standing of NAPFA, they also have a handy “Find an Advisor” search tool.

[Full disclosure — I’m on there and several current clients found me this way.  I’m very proud to be a member of NAPFA.]

3) Narrow it down – once you’ve got a few names, look for concentration in your area of concern, etc.

4) Interview the planners who still seem like they may work.

5) (not actually numbered) – Find out what they charge and what their fee structure is.  Do you pay them by the hour, by the project, as a percentage of the assets you hand over for them to manage, via commissions, etc.

Please don’t take my summary here to be a substitute for reading Eleanore’s very nicely written article, which is the last part of a four-part series she’s written about developing a comprehensive financial life plan.  It’s great stuff and worth your time.

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