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Did You Hire the Right Financial Advisor?

Category: Financial and taxes in retirement

July 15, 2019 — Hiring a good financial advisor is a difficult job for most people.  Although there is no shortage of solicitations that appear in the newspaper, come in the mail, or through a phone call – how do you know if the person who tells you they are so gifted is really that great? Someone who will look out for your interests, not cheat you, protect your hard earned savings, and actually make your savings grow.  After all, your money represents your financial security, which makes making this decision so important and so difficult.

Who Watches Your Account

A while back we profiled a number of tips for hiring a good financial advisor (see Further Reading at end). This feature will build on that and provide some tips for how to evaluate the person you hired, or the one(s) you might be considering for the job.

Seven things to look for

Trust your instincts.  Your intuitions and first impressions are always important. If you feel like you are being swept along into a decision and little voices tell you something might not be right – stop and listen. Further exploration might clear them up, but never dismiss your reservations.

Does your advisor stay in touch?  A good financial advisor does more than send you monthly or quarterly reports. The best ones reach out to meet with you to review how your portfolio is doing (successes and disappointments) and discuss options to improve performance. When the market gets scary, do they reach out and help you focus on the long term?  If you are not hearing from your advisor regularly, it might be time to look around.

Are they helping you build your financial IQ?  If your advisor puts on seminars and meetings that is a good sign that are involved in a partnership, with you as part of the decision making team. And that they are staying current with the latest developments.

Whose interest are they looking out for?  A fiduciary is someone who must act to protect the client’s interest above their own. Find out if your advisor is pledged and registered to be a fiduciary – if not, be wary. Financial advisors seem to have an endless supply of certifications and initials, but there is a difference in them. Some are more stringent than others, with a Certified Financial Planner (CFP) being one of those that require the most hours of training and qualifications.

Who’s getting paid. Financial advisors get paid in a variety of ways.  Be wary of commission based compensation structures. There, it might be in the best interest of the advisor to churn your account or invest in fee based investments (load funds) that probably don’t return any better than no-fee products. Your advisor should advise you if they receive any commissions on your behalf, if they don’t tell you – ask!

How strategic are they, and what kind of products do they recommend? You can find out a lot when you first meet an advisor. What can they tell you about their investment philosophy? If they don’t start with finding out your goals, that’s bad. If they don’t recommend an age-appropriate balance of growth, fixed income, and cash – watch out. Do they recommend rebalancing periodically?  Do they concentrate in a few, seemingly random stocks or bonds, or do suggest an approach that makes strategic sense, balancing risk and reward where not too much gets put in one basket? Be wary of fee based funds and too much emphasis on products like annuities, limited partnerships, and the like. For our money, index funds and large cap stocks and bonds are safer than taking lots of risks in companies or products you never heard of.

How to find a good advisor.  Hiring a financial advisor is tough, with the outcome being very important. So it is worth spending time finding a good one (and if your resources are high enough, maybe having two). Ask your friends and relatives for recommendations. Or successful people you know. Be wary of faint praise. Let talk with several and see for yourself.

Comments? How did you find your financial advisor? We would love to hear how you did, and if you are happy. Please share any tips that would help others in this difficult task in the Comments section below.

For further reading:

Should You Hire a Financial Advisor, or Manage It Yourself
How to Retire on a Lot Less Than $1 Million

Beware Those Steak Dinners

Posted by Admin on July 14th, 2019


  1. I found a great financial advisor at a retirement expo. He is a fiduciary advisor.

    by Chris — July 15, 2019

  2. Yes. Someone I can trust. Me.

    by Peder — July 15, 2019

  3. …and like a good Dr. you want someone YOUNG! That way you don’t have to change in mid-stream, so to speak 🙂 We use two different groups ( I have read too many stories about someone duping folks out of their life savings) so, we have our money split. Both Thrivent Financial and Prudential began as life insurance companies and we have grown with them since the 1980s. They get paid by their employers but don’t charge us directly.

    Our favorite Rep is in his 30s and has discussed options at length with us, how to protect our investments. The package we designed has steadily grown – even when the overall market is down. I have some personal investments that I have made on my own but our bottom line has been very stable. He has also been taking care of a friend who recently found herself facing divorce. He has patiently walked her through her options and helping to her to face independence.

    by Flatearth6 — July 15, 2019

  4. Found our’s through a recommendation. We interviewed him and discussed our plans for retirement and how much risk we were willing to take. He put together a plan that fit our needs and gave us a chance to change or discuss it before signing up with him. We liked what we saw and gave him a third of the portfolio to see how he would do. Well fast forward and he now handles all our investments and since retiring at 60 our portfolio has increased year after year even with our monthly draw from the IRA.
    He is paid a percentage of the portfolio, it goes up he gets more goes down less. He flys to see us twice a year and always available if we call. He cannot make a trade without emailing us or calling as to why we would make the change. Has given great recommendations on tax advisors, long term care and a trust for our autistic grandchild.

    by Bruce — July 15, 2019

  5. Why beware of annuities?

    by Vincent DeBiase — July 17, 2019

  6. Good question Vincent. Nothing wrong with annuities per se. In fact, most people would be better off if they had some of their resources put into annuities, which can offer a guaranteed return. The problem with them would be an overemphasis on annuities, particularly if they carry high fees, unusual terms, or pay commissions to the representative. Annuities differ in quality and terms, be sure to do your homework before you sign on the bottom line.

    by Admin — July 17, 2019

  7. Some of us remember the crash when many annuity companies filed for bankruptcy in the 80s, wiping out some people’s savings. There have also been many warnings over the years about excessive commissions and sales or management fees hidden in annuities. Actuaries who determine the benefits that are going to be payable for investments obviously work for the companies, not the beneficiaries. And annuities aren’t FDIC or otherwise federally insured, so investors need to check the state insurance requirements for annuities in their home states (usually much lower than FDIC, SPIC etc. insurance). Annuities may be a great tool for a balanced portfolio, but do have risks. Good brief summary at:

    by Kate — July 18, 2019

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