Financial Resource Center

Saving & Investing

How to Hire a Financial Planner

by Susan Tiffany, CCUFC / May 9th, 2021

If you’re like many people, you may be tempted to hire the first financial adviser you meet. Or, maybe you’ll get a recommendation from family members or friends. You probably won’t even do a background check.

Make sure you’re not entrusting your college, retirement, or life savings to the wrong person. Here’s how to find a financial adviser who is a good fit for you and your finances:

  • Check references and do a background check—Just because someone seems to have or to spend a lot of money doesn’t mean this person will do a good job handling yours. Fancy cars and rich clients don’t guarantee a good adviser. And just because an adviser has been interviewed by the media doesn’t mean he’s on the up and up. The Securities and Exchange Commission and FINRA—the Financial Industry Regulatory Authority—provide assistance in checking up on advisers.
  • Avoid relying on friends and family—Industry surveys show that more than 40% of all people take financial advice from friends, family, and business associates. Our advice: Just don’t. It’s better to keep friends solely as friends and get your investment advice from a professional you don’t already know on a personal level.
  • Don’t base everything on returns—Choose an adviser who offers long-term performance and who will allow you to ride the market’s ups and downs without being overly risky. Achieving investment success means participating in market gains during good times without losing everything when the market goes down.
  • Your quest should be to find the right person, not the right credential.

  • Don’t let credentials sway you—There are numerous professional credentials and designations for financial advisers. Each credential is different and some mean something—some don’t. Though it’s important to check credentials, your quest should be to find the right person, not the right credential.
  • Interview more than one candidate—Most advisers will tell you they can solve your money problems. Talk to several advisers and base your decision on a background check and other information you find.
  • Realize that cost and payment style should be just part of your decision—Even if you save money in fees, if you work with an incompetent adviser you’ll end up losing more money down the road. If you take a more expensive route, you might not get the quality of service you desire. Examine what you’ll get for your money and find a reasonable balance between services, costs, and compensation. Also consider how much depth of advice you require. You might not need to spend a lot if you’re just looking to put money into a mutual fund each month. If you need an analysis and a financial plan, it might not be worth going the cheap route.

Talk to an investment professional or ask for a referral at your credit union.

Neither the publisher nor the author of this article is a registered investment adviser. Readers should seek independent professional advice before making investment decisions.

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