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Five Ways to Determine if a Financial Advisor Puts Your Goals First

The thought of hiring and trusting a financial advisor to manage your finances can be very frightening. You are basically hiring someone to manage your investments and to provide advice in an area where you do not have the expertise.

To help ensure you and your financial advisor are aligned, we have provided five methods for determining if the advisor is placing your goals and interest first. Consider the following 5 criteria before you begin the relationship.

1) Customization

Make sure your advisor takes the time to understand your personal goals in order to recommend a customized plan that aligns with your objectives and risk tolerance. For example, if you are risk adverse, then the advisor may select investments that earn less return but make you feel more comfortable.

2) Compensation

Advisors may charge a fee for services rather than commission-only from sales of stocks, insurance, or other types of investments. This can be an hourly fee, a flat fee or a percentage of your portfolio. Advisors who charge a fee should be more attentive to your overall financial goals and growing your investments versus a transactional commission-based advisor.

3) Experience

Experience is important. Select an advisor with at least three years of experience and ask if they have a certain investment focus or philosophy. For example, if they do mostly active trading in equities and not portfolio allocation, then your advisor may not be a good fit if you are about to retire.

4) Investment Approach

It is first important to understand the goals of the client and have a financial plan in place and then approach investment allocation. The financial plan is the financial advisor’s road map and direction for giving advice. For example, if you are behind on meeting the objectives for retirement, you may consider being more aggressive with your investment allocation.

You should also understand the advisor’s investment philosophy. Is it too conservative or aggressive for your investing style? Be sure to check their assumptions when projecting rates of return. If they seem optimistic, ( e.g., expecting a 15% return with inflation at 1.5%) – it might not be very realistic/or attainable for the long-term.

5) Accessibility

Discuss with your financial advisor how often you should meet to discuss your portfolio and current circumstances.  Your financial advisor should be working with your best interest in mind and available to meet with you periodically, as agreed with you, to discuss your portfolio.  In addition, he or she should be available for calls or emails.  If your financial advisor does not return your calls or emails, it may be time to make a change.

About Bridgeworth

Bridgeworth, LLC, is an independent Registered Investment Adviser (RIA), which means we are first and foremost a wealth management firm providing comprehensive financial planning. As a fiduciary, we are legally bound to act in our clients’ interest at all times.

Clients of Bridgeworth draw on our breadth of experience and wealth of knowledge. To date, Bridgeworth has 25 members that have obtained their “Certified Financial Planner” designation making us one of the largest groups of CFP practitioners in the region.

Bridgeworth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Bridgeworth, LLC and its representatives are properly licensed or exempt from licensure and a client advisory agreement is in place.

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