By Robyn A. Friedman
City & Shore Magazine
CFP, CPA, CFA, CIMA. To choose a financial advisor these days, you may need to wade through an alphabet soup of confusing professional designations. According to the Financial Industry Regulatory Authority (FINRA), an organization dedicated to investor protection and market integrity, there are over 150 designations for financial advisors, making the choice challenging for many consumers.
“Choosing the right financial advisor is one of the most important decisions anyone can make,” says Michael Silver, a certified financial planner with Baron Silver Stevens Financial Advisors in Boca Raton. “The difference between the right and wrong financial advisor can be life changing – and may be the difference between a successful and unsuccessful retirement.”
Since South Florida has both an affluent population and an aging one, there are a plethora of financial advisors here. Here are some tips on how to choose the best one for your needs.
Check credentials. “Your advisor should have a rock-solid basis of personal finance and investment credentials,” says Mari Adam, a certified financial planner in Boca Raton. “No exceptions.” Check licenses and references. You can also conduct a background check on FINRA.org.
“It always amazes me that someone would hand over their life savings without checking an advisor out thoroughly,” Silver says. The FINRA site contains background information and discloses whether any complaints or lawsuits have been filed against an advisor.
Confirm competency. Some advisors are generalists, able to handle everything from college planning to estate planning. Others specialize. The advisor you select may be a whiz at choosing stocks, but if you’re looking for retirement advice, he or she may not be the right professional for you. Make sure your potential advisor is skilled in the areas most important to you.
Understand how your advisor gets paid. Ask how your advisor charges, whether it’s a fee based on assets under management, hourly charges or commissions. Adam says the trend now is strongly in favor of fees to avoid conflicts of interest from lucrative product commissions.
Ask about other clients. Most advisors work with specific types of clients, Silver says. That way, they better understand the needs, goals and desires of their typical client, who may be a retiree, physician, entrepreneur or athlete, for example. Select an advisor who understands your needs — and, to avoid being lost in the shuffle, try not to be the advisor’s smallest client.
Establish rapport. You and your advisor need to have a good rapport to work well together. Your advisor needs to understand your life and what’s realistic for you. Some women prefer to have female advisors, who may be better able to understand the financial, family and childcare pressures faced by women. Make sure you feel comfortable with your advisor from the beginning.