Finding the Right Financial Advisor

Finding the right financial advisor can be a difficult task for new investors. Financial advisors can help individuals get their finances in order to better prepare for their future.  Many people simply find a financial advisor via referrals, but is this really the best way to find the right advisor?  Through advancements in technology, computer algorithms can now be used to create a better match between individuals and financial advisors.  Finding the right financial advisor is the key to a long and successful financial relationship.


Who is a Financial Advisor?


A financial advisor is a professional who offers financial advice, products, and services to clients depending on his or her licenses for a form of compensation.  Compensation may be in the form of a fee (hourly or flat) or commission.  Financial advisors may operate through wire houses or independent broker dealers.  Financial advisors are regulated by FINRA and the SEC.  Personal financial advisors rely primarily on face to face meetings to contact clients.

Financial advisors provide expert advice in order to help individual investors and their families get their financial house in order.  Additionally, financial advisors often offer holistic financial services.  This may include:  comprehensive financial planning, retirement planning, college planning, estate planning, insurance, tax advice, and cash flow management.


Who is an Investor?


Investors are individuals who allocate capital and/ or resources with the goal of making a positive financial return.  Simply put an investor is anybody who invests their money in order to make more.  There are two types of investors and both need a financial advisor:

  • People who have wealth and are looking to preserve and grow it.
  • People who are looking to accumulate wealth.

If you fall into either of the two categories shown above then you are an investor.  Investing is crucial to securing your financial future and financial advisors can offer advice to maximize your investments.


Why Do I Need a Financial Advisor?


Financial advisors are highly skilled professionals who help people with their finances.  Managing your finances can often be a difficult and often confusing task.  When it comes to personal finances all investors want to know one thing:

Am I going to be okay?

This question seems incredibly simple, but it encompasses a number of significant questions such as:

  • Will I be able to afford a house?
  • Can I afford a new car?
  • Will I be able to retire?
  • Will I be able to send my children to college?

Financial advisors help people manage their finances and prepare for their future.  Financial advisors are similar to doctors, lawyers, and accountants.  Advisors are someone whom you have a relationship with and look to for advice.

Furthermore, financial advisors can help you eliminate financial inertia.  Financial inertia is the resistance or procrastination, which prevents investors and their families from getting their financial house in order.  Financial advisors can make tough decisions and give honest advice to better increase your chances of achieving financial stability.


How Do I Know If I Have the Right Financial Advisor?


Having the right financial advisor is essential in order to facilitate a relationship that can last through many market cycles.  The right financial advisor is someone who not only meets your financial needs, but is someone whom you can relate to on a personal level.  The right financial advisor is someone that you like, trust, and respect.  Seven ways to know you have the right financial advisor include:

  • My advisor helps reduce my tax liability.
  • My advisor never makes me feel like I’m bothering them.
  • My advisor explains the recommended investment program in a way I can describe it to my family.
  • My advisor cares enough to say when they think I’m making a bad financial move.
  • My advisor uses software programs that make me feel comfortable about my retirement prospects.
  • My advisor addresses all my insurance needs and I feel comfortable that my family is protected.
  • My advisor keeps me in the loop with quarterly reports and frequent communications.


What are the Biggest Mistakes When Looking For a Financial Advisor?


Many investors fail to do their due diligence when selecting a financial advisor.  Finding the right financial advisor takes time and many investors fail to ask enough questions.  The seven biggest mistakes when choosing a financial advisor include:

  • Using the yellow pages or a simple internet site that only matches your zip code to a local advisor.
  • Not verifying the individual through federal and state regulatory agencies.
  • Failure to choose an advisor who acts as a fiduciary.
  • Failing to properly determine a risk profile and creating a matching program.
  • Choosing strictly by location or how fancy the office looks.
  • Not engaging with a professional that can “put it all together”.
  • Choosing strictly on lowest cost by utilizing a computer generated portfolio.


How Can Right Financial Advisor Help?


Right Financial Advisor is a web-based algorithm that matches individual investors and their families to qualified vetted financial professionals.  Right Financial Advisor is committed to matching investor core financial needs and personalities to the core competencies and personality of advisors.  Right Financial Advisor makes it easier to find a qualified financial advisor who is right for you.

Many other advisor matching services ask a narrow spectrum questions about portfolio size and zip code.  However, Right Financial Advisor asks broad spectrum of questions about financial needs and personality.  By overlaying personality questions with financial needs based questions, Right Financial Advisor can increase the probability that the investor and advisor matched can last through many market cycles.


Right Financial Advisor’s Nick Bredow, contributed this report.


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