Money Basics

Choosing a financial advisor

A good financial advisor can help you achieve your financial goals. If you want help selecting mutual funds, stocks and bonds, or other investment options, take time to carefully evaluate candidates. Here are some tips to start the process.

• Ask family members, friends, an accountant, lawyer, or banker for referrals. Financial planning associations can also provide you with the names of financial planners in your area. Once you have a list, interview several candidates. Make sure they understand it is an interview only and that you are not seeking financial advice at this time.
  
  
• Examine qualifications. What is the candidate's training? Is he or she a registered investment advisor? Is he or she licensed to sell financial products? Can he or she provide references? If the candidate manages assets, ask if his or her investment style is conservative, moderate, or high risk.
  
  
• Be sure you understand the costs involved. Is the advisor paid on a fee-only basis? If he or she is in charge of your total investment portfolio, does this advisor charge a percentage of assets? Does the planner earn a commission on the financial products you buy, or does he or she charge a fee for planning and receive a commission?

Decide if it's a good match. Does the planner understand your financial goals and respond to your concerns and questions? Does he or she listen to you and appear to respect your opinions? Does the advisor use a lot of financial jargon or offer helpful information you can understand? Do you trust and feel comfortable dealing with this person?