If you’re reading this article, it means you’re probably in the market for a financial advisor, and for good reason. A 2020 study from The Journal of Retirement found households using financial advisors collected 15% more retirement income than those without advisors. There is no shortage of financial advisors to choose from. A quick internet search will likely yield hundreds of options near you. Finding an advisor is easy enough; the real task is knowing how to choose the best financial advisor for you.
What kind of planning services do you need?
Financial advisors cover a broad range of services, from investment advice and portfolio management to insurance coverage and retirement planning. By identifying the areas in which you most need help, you can search for financial advisors best suited to your needs. Of course advisors can help with your 401K, but many offer services well beyond investments. These can include budgeting help, tax planning, college planning, estate and trust planning, insurance coverage, and more. You should also consider what your future needs might be. Do you foresee any major life changes in the next 5 years? How about the next 10 or 20? Buying or remodeling a home, having children, changing jobs, and retirement are just a few examples to keep in mind. Perhaps you’ve recently undergone a life change, like a change in salary or an inheritance.
What kind of planner is right for you?
In the modern world there’s an online alternative for just about everything. Financial advisors are no different, with a plethora of new online-only and robo-advisors cropping up. These online options often come with lower fees than traditional advisors but can’t offer anything close to the level of service available in-person. A traditional financial advisor is the best choice for people who want help and guidance with more than just an investment account.
Additionally, consider the different ways advisors charge their clients. Most traditional advisors are fee-based, meaning they charge a percentage of assets under management (AUM), typically around 1%. However, some charge an hourly or flat-rate fee, or work off commission. There can even be advisors who combine two or more of these. Be aware of how an advisor makes their money and ensure their interests are in line with yours.
Financial Advisor Titles
There are a lot of titles, certifications, and other fancy acronyms floating around. It can be confusing trying to understand how they relate to your needs. Anyone who gives investment advice must register as an investment advisor, but not all investment advisors are the same. The most important distinction to find is a fiduciary. Fiduciary advisors are legally obligated to act in the best interest of their clients, while non-fiduciary advisors only need to recommend products they deem “suitable.”
Research the advisor
All registered investment advisors with greater than $25 million AUM are required to submit a Form ADV to the Securities and Exchange Commission (SEC). A Form ADV provides key information about the advisor like asset style, AUM, key employees, as well as any past disciplinary action taken against them. You can search for a financial advisor’s Form ADV on the SEC’s Investment Advisor Public Disclosure (IAPD) website.
Meet with the advisor
Finally, meeting with prospective financial advisors will give you information no amount of online research can provide. This is your chance to ask questions and get a feel for how an advisor thinks. Tell them about your current financial situation, as well as any goals, worries, or plans you have. This conversation will help you determine if their specialties and expertise align with your needs and goals.
The information provided is for informational purposes only. It is not intended to be used, and should not be used, as the sole basis for legal and/or tax advice. Individuals should seek and rely upon the guidance and advice of their own legal and tax counsel before making any decisions regarding any planning, investment, tax concepts or strategies discussed herein. Individual circumstances may vary and results discussed are no guarantees of applicability or future performance.
Certain of our representatives are Certified Public Accountants with the accounting firm Ben H. Crowe, C.P.A., LLC which is affiliated with Marietta Wealth Management. To the extent that these representatives provide accounting services, which may include tax advice, to any clients, including our advisory clients, all such services shall be performed by those representatives, in their individual professional capacities, independent of our advisory firm, for which services we shall not receive any portion of the fees charged by the representative, referral or otherwise. It is expected that these representatives, solely incidental to their practices as accountants, recommend our advisory services to certain of their clients. No client of Marietta Wealth Management is under any obligation to use the accounting services of these representatives. Our Chief Compliance Officer remains available to address any questions that a client or prospective client may have regarding this potential conflict of interest.