How to choose a financial adviser

Simple, but not easy. Anyone and their brother can call themselves a financial adviser, advisor, planner, investment specialist, wealth manager, etc. And let me tell you that you would be shocked by the brouhaha in financial trade journals over whether or not advisors should have to be compelled (!!) to adhere to a fiduciary standard. A fiduciary standard simply means that the advisor is legally obligated to put YOUR best interests first, rather than, say, the product that pays him the best commission, wins him the free vacation contest, or allows him to meet his sales quota and keep his job.  People who are not fiduciaries are SALESPEOPLE and, uh, maybe what they’re peddling to you is somewhere in the realm of possibly being remotely suitable for you. If you hear any of the following terms, hold onto your shirt and wallet and run: non-traded REITs, master limited partnerships, most annuities, whole life, hedge funds—wait, the list is getting a little long.

 

But don’t take my word for it. Gregory Karp, who writes a column called Spending Smart for the Chicago Tribune, recently had an excellent article about how to choose an advisor. You can read it for yourself.  I couldn’t have said it better myself, and I welcome anyone who wants to quiz me on any or all of his criteria. I particularly like that he highlighted the difference between fee-based (you’re talking to a broker/salesperson who is getting a fee AND commissions), and fee-only (you’re paying solely for advice, which should be free of owing any commissions or referral fees to anyone).

 

My only complaint about the article is that the Trib tends to bury consumer financial articles in the business section, where the people that need to see it often don’t. If only we could get this information into the features section, next to the gardening, decorating, recipes, and parenting advice.

 

Posted in General Financial Planning, Investment Planning.

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