Experience: Look for someone who has been in the financial industry for several years and, preferably, has a “team” of specialists. The reason is that often the team members will have more expertise in a variety of topics whereas a sole advisor might not have as much knowledge as one of their team members. Another good idea is to choose someone who has seen different types of market conditions and has a track record of helping clients achieve their financial goals given the fluctuations of the markets. This will give you confidence in their ability to provide guidance and support as you work towards your financial goals. Experience matters a lot in this business!
Qualifications: The financial planning industry has a number of professional licenses and certifications that advisors must earn to demonstrate their knowledge and skills. These include, but are not limited to, a Series 7 license and a Certified Financial Planner (CFP) certification. It’s important to make sure the advisor you choose has the necessary licenses and qualifications to provide professional quality advice.
Fees: Make sure that you understand how a financial advisor charges for their services, including any upfront or ongoing fees. Some advisors charge an hourly rate, while others charge a percentage of the assets they manage. Some charge commissions. Choose an advisor who can charge a fee structure that you are comfortable with and is best suited to your financial goals. Generally, working on a fee basis aligns the advisor with their client’s interests so be certain to ask how you will be paying for their services.
Services offered: When considering a financial advisor, it’s important to determine what services they offer and whether they are compatible with your needs. Have the advisors delineate exactly what you can count on them for, some of which include generational planning, buying and selling of stocks, lending, asset allocation and retirement planning, just to name a few. Make sure to choose an advisor whose services meet your specific needs and goals. Some advisors may offer a comprehensive financial planning package that includes everything from budgeting and debt management to investment advice and retirement planning. Others may offer à la carte services, allowing you to choose the specific services you need. Consider your needs and goals and choose an advisor whose services meet your expectations.
Investment philosophy: Your advisor should understand your investment philosophy and approach to risk management to ensure you are both on the same page. Investors are usually classified into three main categories based on how much risk they can tolerate. Would you prefer to be aggressive, moderate, or conservative with your money? Knowing your risk tolerance level helps advisors plan your entire portfolio and will drive how they invest for you. Your investment philosophy should be based on your personal financial situation so it’s essential to be clear about what you are expecting from your advisor. Don’t expect them to guess. This is an important relationship and all these things should be discussed thoroughly. This will require you to be forthcoming about your own expectations and goals. And, keep in mind that as your relationship with the advisor continues, these things will change over time. A lot of this will depend on your age and the ages of your family members. An advisor who understands what you want will be better equipped to help you make informed investment decisions that will satisfy your long-term financial goals.
Communication style: The communication style of a financial advisor is also an important factor to consider. Choose an advisor that you feel comfortable working with and who has a communication style that you like. You will need to be clear about your expectations. Some people want to be in contact frequently, others quarterly, some less often. Consider your own communication preferences and choose an advisor whose style works best with your preferences. Good communication builds trust and ensures that your advisor is able to provide the support and guidance you need. Always take the time to review the monthly statements that are provided by the firms. Look for an advisor who is responsive and proactive and who is willing to take the time to fully understand your needs and concerns. Strong communication is essential for a successful advisor-client relationship.
Client base: It can be helpful to choose a financial advisor who serves a client base similar to your own circumstances, as they may be better able to understand and address your specific needs and concerns. They will be more familiar with the unique financial challenges and opportunities you may face and will be better able to provide tailored advice and support. Similarly, if you are approaching retirement, you may want to look for an advisor who has experience working with clients in your age group and has a strong understanding of the financial considerations that come with retirement and generational planning.
Conflict of interest: It’s important to make sure the financial advisor you choose does not have any conflicts of interest that could influence the advice they give you. This includes receiving commissions for recommending certain products or services and receiving commissions for buying and selling stocks. As mentioned above, working on a fee basis aligns the advisor with their client’s interests. So, choose an advisor who is transparent about their fee structure and any potential conflicts of interest.
References: Asking for references from current clients can be a helpful way to get a better understanding of a financial advisor’s work style and effectiveness. These references can provide valuable insight into an advisor’s communication style, knowledge and expertise, and overall approach to working with clients. They can also help you get a sense of the level of support and service you can expect from an advisor and their team.
Compatibility: Trust your instincts when choosing a financial advisor. Choose someone you feel comfortable working with and who you believe will have your best interests in mind. Consider their communication style, personality, and overall approach to financial planning. It’s important to find an advisor who you feel comfortable discussing your financial situation with and one who you believe will provide sound and unbiased advice.
In summary, there are a number of factors to consider when choosing a financial advisor. Look for an advisor who has experience, qualifications, and a track record of helping clients achieve their financial goals. Understand how they charge for their services and make sure their fee structure is compatible with your needs. Trust your instincts and choose an advisor that you feel comfortable working with and who you believe will have your best interests in mind.
Rebecca Rothstein works with high-net-worth individuals, families, and institutions, helping them advance their wealth management goals. She began her career as a financial advisor in 1987 at Bear Stearns. She spent 10 years with Deutsche Bank Alex Brown and 13 years with Morgan Stanley Private Wealth Management (formerly Smith Barney) before joining Merrill Lynch. As a Managing Director at Merrill Private Wealth Management, Rebecca focuses on wealth management, tax minimization, and estate planning strategies for affluent clients. She also works with corporate officers, devising liquidity and diversification strategies for concentrated positions. Rebecca has garnered a number of national honors as a financial advisor. Barron’s magazine named her one of the “Top 100 Financial Advisors in America” from 2007 successively through 2012. Barron’s also named Rebecca one of the “Top 100 Women Financial Advisors in America” from the inception of the list in 2006 successively through 2012, profiling her in the 2012 issue. In 2017, Rebecca was recognized by the national publication Forbes, which named her one of “America’s Top Wealth Advisors.” In 2018, 2019, 2020, and 2021 Rebecca was again recognized by Forbes, which named her the #1 of “Top Women Wealth Advisors.” Rebecca is very active in the community. She is the Chairman of the Board and Founder of Teen Cancer America (a global charity founded by Roger Daltrey and Pete Townshend). She is also a co-Chair of the Childhood Autism Board at UCLA, which helps children who have been diagnosed with autism, developmental disabilities, and behavior disorders, and she is a board member of the UCLA Health System. In her free time, Rebecca enjoys cooking, sailing, and participating in a number of charitable efforts. She has four sons and splits her time between Incline Village, Nevada and Beverly Hills, California, with her husband Ron.