- Marriage or divorce.
- Having a child.
- Getting a new job or losing an old one.
- Starting a business or closing a business.
- Receiving an inheritance.
In these scenarios, a trained advisor can help you define new financial goals and make realistic plans to reach them.
How to hire a financial advisor
The right advisor will have expertise appropriate for your situation and excellent communication skills. You'll be working closely with this professional, discussing potentially sensitive details about how you earn, spend, and save your money. Those types of conversations are most productive with an advisor who listens, builds trust, and inspires confidence.
To find the right professional, start by asking friends, family, and professional colleagues for recommendations. You can also search online and check relevant databases for advisors in your zip code via:
- The Better Business Bureau.
- FINRA's Broker Check.
- Investment Adviser Public Disclosure.
- CFP Board database.
Build a shortlist of candidates from these sources and then interview at least three of them. The personal interview is your opportunity to assess the individual's professionalism and communication skills. You can also inquire about:
- References: Has the advisor worked with clients like you before, and what was the result?
- Credentials: What credentials does that advisor hold and what was required to secure those credentials?
- Expertise: What are the most common goals across the advisor's client base? What is the average net worth of the client roster?
- Fees: Does the advisor charge commission, flat fees, hourly rates, or a percentage applied to funds under management? Note that commission-based charges can encourage an advisor to promote heavy trading, which may not be in your best interest.
- Standard of care: Financial advisors should follow the fiduciary standard of care or the "best interest" standard as defined by the SEC's Regulation BI. Both require the advisor to prioritize your best interests above all else. Regulation BI, however, applies to investing specifically, while the fiduciary standard covers all financial advice, including insurance.
