by Ashley
When I was talking about my 2025 financial goals, one of the goals I mentioned was hiring a financial advisor. My husband and I had initial consultations with a couple of advisors maybe 2-3 years ago but walked away without hiring anyone. At the time, it felt like we were doing a pretty good job managing our own investments and I didn’t see the benefit in paying someone else to do what we were doing just fine on our own.
A couple of things have changed since then.
First, our investments have grown and become more varied. We no longer hold 99% of our investments in retirement accounts. That’s still where the majority of our money resides, but we also have regular mutual funds, some CDs, investments in HSAs, 529s, and more.
Second, our income has gone up. As income has increased, we’ve had more disposable income that we’d like to set up in some sort of automatic investment vehicle. Also, we may be over the limit for certain investments and we need more solid advice on these situations.
Finally, as you know, my dad recently passed away. We are very fortunate that he had a healthy life insurance policy (taken out pre-dementia diagnosis!) and an estate that will be divided among his heirs. But again, all this lends itself to further confirmation that we need to find a financial advisor.
That’s taken me down a rabbit hole of research and I wanted to share some of the tips I’ve learned as I’ve been trying to figure things out.
What are your needs?
For us, I think we messed up the last time around in that we were meeting with advisors without really knowing what we wanted. People talked to us about how to manage our investments, but we’re already pretty good in that regard. We have several investments and make pretty decent ROI. I don’t need to pay someone a fee or commission to do what we’re already doing just fine on our own.
This time around, we know we want someone who can help us come up with a more robust financial plan. I shared in my most recent post that I don’t want to work until an old age. How financially feasible and reasonable would it be for me to retire early? What will it take to make that happen? Are we on target? What changes do I need to make for that to be a reality?
Similarly, we want tax-related advice. We’ve done our own taxes for years and, yes, I realize a CPA is different from a financial advisor. But I’d like to get a financial advisor’s advice on some tax-related matters as they relate to investment strategies. For instance, can they help me figure out the best tax advantaged investment strategies available to us?
Ultimately, you need to find a financial advisor who can meet your needs.
How are they paid?
I know this may be a bit ironic, but my Dad was a financial advisor for his whole career. Unfortunately, it’s really only in the last 5-10 years that I’ve had any money to invest… so he was never really able to help me in that regard. Even so, he did teach me a couple of things when I was younger. One of the big things he harped on was to pay attention to how the financial advisor is paid.
My dad explained that oftentimes financial advisors may try to “sell” you investments that will yield them the biggest paycheck. For instance, annuities often come with the highest fees. And sometimes investments may have “kick backs” for the investors, so they may be inclined to recommend things that benefit them even when other lower-priced options may be equally well performing.
Some of this you can avoid by finding a fiduciary. These are advisors who are required to put your interests ahead of their own. But even working with advisors with a fiduciary responsibility, it’s good to know if the advisor charges a flat fee, a percentage of your assets, a commission based on the investment product, etc. This is something I will be asking in my upcoming financial advisor meetings.
What are their credentials?
Are they a CFA, CFP, or RIA? Ask how much experience they have, and what kinds of training or special education they received, to ensure they have proper training.
Do they have a positive reputation?
Can you find positive referrals online, perhaps in Yelp or on Google reviews? If not, you can ask if they can provide clients who would be willing to give a positive review. Or ask your friends and family if they have someone they would recommend. Along the same lines, you may want to do a little internet research on your selected financial advisor before signing any agreements. Make sure they have not had any disciplinary problems, especially related to finances (e.g., fraud, etc.).
Is it a good fit?
You want to like and feel comfortable with the person who will be helping manage your money or devise long term financial planning. Prepare a list of questions for your initial consultation to get an idea of how they work and whether you are on the same page and a good fit. You really want to make sure you fit in all the areas above (your needs match their service offerings, you are comfortable with their fee structure, they have the proper credentials and a strong business reputation, and you feel like you will get along well and trust their investment strategy).
There you go! I have 3 meetings set up across the next month-ish with 3 different financial advisors. I’m hoping to have a lot more information and to come out of the meetings having found someone I feel like is a good match with our needs to help advise us moving forward.
If you work with a financial advisor, how did you find them? Is there anything else you’d add to the list above?
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!