By John Drachman
Congratulation! After a period of reviewing recommendations from friends, family, and online services like MyPerfectFinancialAdvisor, you narrowed your search for a financial professional to a manageable handful. The final qualifying round is now at hand. What steps should you take before selecting the lucky winner?
- Revisit BrokerCheck: From beginning to end, the typical selection process can take weeks. According to a Financial Industry Regulatory Authority (FINRA) study, about seven percent of the financial pros listed in the BrokerCheck database have proven to have at one incident of misconduct. “Past misconduct is predictive of future misconduct,” says Mark Egan, an assistant finance professor at the University of Minnesota. Many of these bad apples find work at another financial service firm. With time’s passage, it is worth one more visit to BrokerCheck to ensure your candidates are still on their best behavior.
- Consider their social media feed: Entrepreneurs know instinctively to check out the social media activity of a potential job candidate. It should not be any different for hiring a financial advisor. “You can tell a lot about someone by what they post,” says Financial Planner Grace S. Yung of Midtown Financial Group.
- Beware of unfamiliar acronyms: Unusual terms can sound impressive. With so many hovering around the universe of financial professionals, meaningful designations may get lost in the acronym alphabet soup. Take a minute to visit FINRA’s listings to separate the wheat from the chaff. There are many designations that have no pre-requisites, no ongoing requirements, minimal time needed to take the exam and no public disciplining of holders of the mark-these are the designations you want to be wary of.
- Discuss fees one more time: Review fee expectations with your shortlist. “It’s important to know how people are compensated so you can look out for red flags such as self-serving advice versus making the best choice for your situation,” says CFP Katie Brewer.
- Listen to your inner voice: Put a little mindfulness to work before making your final choice too. How have your advisor candidates been communicating with you so far? If some tend to talk over your head, seem abrupt or disinterested in your goals, and are reluctant to discuss costs, consider removing them from the shortlist. Your comfort level is essential. While someone may look good on paper, draw a line through their name if they do not convey adequate interest in your needs.
The Bottom Line
With so many types of financial decisions about investment accounts, insurance, and college savings to make, you may want to ensure your advisor is keeping your best interests top of mind. To keep your advisor on your page, it would not hurt to request that your winning professional sign a fiduciary oath, or similar agreement to ensure they will put your interests first.
John Drachman is a contributing writer to myperfectfinancialadvisor, the premier matchmaker between investors and advisors. John is an IABC award-winning writer who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.
