Financial advisors 101: Finding the best financial consultant for you

You’ve been contributing to your workplace 401(k). Maybe you have a Roth IRA or other investment account on top of that. But you really haven’t given much thought to planning for your retirement.

That pretty much describes me for most of my 20s, 30s and 40s. My retirement planning wasn’t actually a plan at all; it was really just contributions made on auto-pilot. Quarterly statements that came in the mail were thrown, unopened, into a file box labeled “401(k)” and then forgotten. I figured that it was a long-term investment, so I shouldn’t stress myself out worrying about short-term stock market ups and downs. I’d rebalance my fund allocation once a year when the rep from Fidelity came to our office for retirement consultations, but otherwise, I didn’t give it much thought. 

But after I turned 48 – with “the big 5-O” looming on the horizon and a decision to be made about the 401(k) from my old job – I took the plunge and enlisted a financial planning consultant. I learned a lot along the way, and I hope that my experience can help you. 

Finding a financial consultant 

Choosing a financial consultant can be a daunting prospect. First, you have to be able to trust the consultant you choose. After all, you’ll be sharing a lot of confidential information with them, and you need to be confident that they are qualified. But how can you know if they’re trustworthy? How long have they been working in the investments field? Who else have they worked for? Have they been taken to court by a previous client? Are they licensed/certified? There are a lot of questions to consider, and fortunately, getting the answers is easier than ever.

Let FINRA do the heavy lifting for you

FINRA, the Financial Industry Regulatory Authority, maintains an online database called BrokerCheck^®  that can be used both to find qualified brokers/advisors near your ZIP Code and to research a specific financial consultant you are considering. You just enter the potential financial consultant’s name into the search field and Broker Check will produce a report for you.

FINRA BrokerCheck reports include:

• employment history
• professional qualifications, certifications and licenses
• legal “disclosure events” if the consultant has had any; these might include disciplinary actions, criminal convictions, civil judgments, personal bankruptcies or arbitration awards

BrokerCheck also lets you research brokerage firms, providing profiles with information on the firm’s history and operations, as well as the same types of “disclosure events” mentioned above.

Review a potential financial consultant’s social media footprint

Check to see if the consultant you’re considering – or the financial institution that he or she represents – is on Twitter. If so, read the feed. Do they present themselves in a way that is professional? Are there critical or angry tweets from clients or now-former clients? If they have a Facebook page or LinkedIn profile, check out those pages too, looking for professionalism in their posts and their back-and-forth with commenters. If a financial consultant isn’t on social media, don’t let that dissuade you from working with him or her; there are rules and regulations regarding how a consultant can interact with commenters, because most investment advice is personal to each individual.

Financial consultant personal recommendations

Then there’s the tried and true, old-school way to get recommendations: Ask friends and family – especially the ones you know to be money savvy – for word-of-mouth recommendations. If you don’t want to ask people in person, try the 21st century update: Ask on Facebook! Some of your friends, especially if they are older than you, already have a financial advisor or consultant or know somebody else who does. They’d be happy to give you a name or a thumbs up or down vote on someone you ask about. Just be sure to mention that they should answer via a private message, email or phone call if their recommendation involves revealing any personal information.

Auditioning the candidates

If you’ve narrowed your options down to two or three people, but you’re not sure which one to choose, you could do what I did – audition them! I met with several potential financial advisors before making up my mind. Each of them offered a free consultation, so it didn’t cost me anything.

One was eliminated for being a bit too pushy; his hard sell tactics made me a little uncomfortable. I had told him that I was open to rolling over my old 401(k), but didn’t want to move my Roth IRA fund from where it was. He insisted that the only way to go was to consolidate all of my accounts into one. Thus, he was eliminated.

The financial consultant I ended up selecting was respectful of my decision to leave my Roth IRA where it was. I explained to him that my reasons were twofold – I didn’t want all of my funds to be with one company and I was loyal to the broker there, as he had given me good counsel when I was undergoing treatment for cancer several years ago. His response was that he hoped to earn the same loyalty from me over the years. I thought that was a pretty good answer, so I told him to proceed with making a plan for my rollover.

In part 2 of this series, I’ll review the materials and information that I needed for my first meeting with the financial consultants I auditioned.