Choosing a Financial Advisor: What to Know Before You Invest

Type of Advisor and Experience Required

The financial services field is broad and there are a number of different types of advisors who offer a range of qualifications, experience, and services. Determine what your primary needs are, such as: help establishing a nest egg, planning your retirement, or buying a house, and look for advisors with experience in those areas.

While most advisors can assist you in developing general long-term financial strategies, many advisors specialize in niches like total wealth management, services for business owners, or financial advice for women. If you need specific experience, make sure you seek out advisors who qualify.


Qualifications and Experience

Check the qualifications and experience level of any prospective advisor before investing with them. While certifications and professional designations are not everything, advisors with legitimate designations have demonstrated a desire to go the extra mile in their professional training. Most of these designations require candidates to demonstrate competence in a range of topics and meet high ethical and professional standards.

You can also check an advisor’s credentials and complaint history using FINRA’s BrokerCheck or the SEC’s Investment Advisor Search.


Know Your Options

It’s important to be objective when choosing an advisor, and setting up multiple interviews allows you to compare advisors and select the one that best fits your needs. Use a process of elimination and cross each advisor off your list as you identify your likes and dislikes. Focus on objective criteria such as years of experience, qualifications, as well as subjective ones such as personality match. You want an advisor who meets your needs as well as meshes with your personality.


Advisor Alphabet Soup

Many advisors increase their experience through professional designations. While this list isn’t exhaustive, here are some of the common acronyms you may see after an advisor’s name.

CFP®: CERTIFIED FINANCIAL PLANNERS TM must demonstrate competence in a range of financial planning topics, and are held to high ethical and professional standards.

ChFC: Chartered Financial Consultants study a variety of financial planning topics and must have a minimum of three years of experience.

CLU: Chartered Life Underwriters are trained in a wide range of insurance specialties.

CPA: Certified Public Accountants have passed rigorous exams on accounting and tax preparation.


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