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"Financial Advisor" is a very broad term. Depending on the advice that you are looking for, I would look at different people.
General comments:
1. As mentioned several times in this thread, a key to objectivity regardless of type of advisor is "how is the advisor being paid?" You need to know all sources of compensation, especially if the advisor is buying you products.
2. Size of the firm is NOT a factor to take into consideration if you truly want the best. Sometimes the "best" of a given type of advisor in an area is in a large firm, more frequently you will see the true experts either have their own firm or are in a smaller partnership. Regardless, you want to make sure the firm is carrying the proper insurance (E&O - errors and omissions), and a fidelity bond. If the firm is actually affiliated with a broker/dealer you will want to be comfortable with the history/reputation of that b/d.
3. Local reputation is VERY important - more important than the specifics I list below.
Types of Advisors: (Not totally comprehensive but a good start):
- If you are looking for a Financial Planner - that is someone to look at your current financial position, your income, taxes, living expenses, etc. and goals and from there work out a plan to reach your goals - Go see a Certified Financial Planner (CFP). For the most objectivity this type of advisor should be fee based and should NOT be selling products.
- If you are looking for a Portfolio Manager - someone who manages your investment account, buying and selling stocks, bonds, ETF's etc., look for a Chartered Financial Analyst (CFA). Normally, a fee based on assets under management with no other compensation paid to the PM will nuture the most objectivity on security buying/selling.
- If you are in need of tax planning - a Tax Attorney should be hired. Look for one who is a CPA. This professional will normally charge you either a flat fee for a project or charge by the hour.
- If you need insurance (this may be recommended to you by a Financial Planner or Tax Attorney), you will want to use an Insurance Broker/Consultant. Look for CLU/ChFC designations. The insurance professional will normally be paid a commission for executing your insurance plan, though sometimes a fee may be involved in more complex cases.
- If you are looking for specialty work in an area such as Estate Planning or Business Succession - you will probably be working with a Tax Attorney AND an Insurance Specialist. Look for an Insurance Specialist to have the CLU/ChFC or preferably a Masters of Science in Financial Services (MSFS) with a concentration in the area you need. In this case you will probably be paying a commission on the insurance and a fee for the Attorney.
If you are working with someone who is trying to do all of the above for you - be very careful. Each of these "Financial Advisor" areas require an expertise that would be very difficult for a single person to handle in depth for you.
There are other types of financial advisors out there. The synopsis above is just a good first step for the majority of people.
Good luck!
posted by 64.81.15...
, Wed, 14 Apr 2004 12:26:21
, Wed, 14 Apr 2004 09:29:06
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