Choosing a Financial Advisor: Part One

Personal Money Planning |

By Gary Silverman, CFP®

People regularly ask me how to choose a financial advisor. After my stock answer of “choose me,” I begin by asking them why they want one. Financial advice means different things to different people.

One such person told me that he had some stocks that he wanted to buy and wanted me to buy them for him. Well, that’s not giving financial advice. He did his own research and wasn’t interested in other aspects of planning. He didn’t want advice; he just needed someone to buy stocks. For him, calling up (or logging into) a discount broker satisfied his needs.

A recently married woman discussed setting up a trust for her kids and making sure the money she brought into the marriage made its way to her kids upon her death. She did need some advice, just not financial. She wasn’t interested in investments, retirement planning, or any other sort of financial services. I referred her to an estate attorney because they specialize in drafting wills and trusts among a host of other estate-related issues.

The next few columns are for those looking for someone to help with financial planning, investment, and insurance.  Deciding if you require a financial planner, stockbroker, insurance agent, or CPA for your needs requires some thought. There is no one answer. You may already have trusted professionals you are working with and just need to fill in some gaps. Maybe you’re handling the investing yourself but need someone to help determine if you’re saving enough to reach your retirement and life goals. You may want a comprehensive plan by a generalist who will act as the quarterback and call in specialists as necessary. Or you may want to choose a specialist and act as your own quarterback.

As you can see, before you begin doing homework on the professional you want to use, you must understand what your needs are. Do you need a place to put the investments you have already researched? Do you need help with your estate? Are you struggling with cash-flow and debt issues? Are you wondering if you can afford to retire? Are you turning a hobby into a business? Do you want to save money so your kids can go to college and support you for a change? Did you get a large inheritance or win a jackpot and need guidance on how not to blow the money? Are you worried about a high tax bill? Is it life, health, disability, long-term care, and other insurance needs that keep you up at night?

Start by examining what you think you need help with. Next week, we’ll look at the professionals you might consider getting help from.

Remember the people of Maui who are trying to rebuild their lives and mourn those whom they lost.