How To Find A Personal Financial Advisor

by Jacques Sprenger on September 20, 2010

Some lucky people hire personal financial advisors and financial planners to manage their wealth. I say “lucky” because they enjoy a superior financial level which means that they belong to the upper echelon of the economic class. There are, however, a few caveats that must be observed when another person, no matter how trusted he/she may be, makes financial decisions with your money. You could actually lose most or all of your fortune at the hands of unscrupulous money managers.

Even Financial Experts Can Be Scammed

“The situation was even worse than I had feared. It was my own planner, who was under investigation for siphoning off what appeared to be millions of dollars from client accounts,” says Ron Lieber of the NY Times. He writes a financial column, which makes him an expert in this area. He himself recognizes the irony of the situation, though apparently he didn’t lose any cash. As he explains, one should be extremely careful when handing the keys to a total stranger, no matter how well recommended he/she may be. Make sure that when you seek the help of a professional, you do your due diligence before entrusting them with your personal financial planning strategies.

There is No Absolute Guarantee

The difficult times are affecting even the wealthy, as we can see in the pawn shops of Palm Beach, Fla. Is it then normal for accommodated individuals to distrust financial advisors? “More than three-quarters of individuals with at least $1 million to invest intend to move money away from their financial advisors, and more than half intend to leave their advisors altogether,” according to Shelly Banjo of the Wall Street Journal. Shelly advises that you approach the advisor as if you were the boss, not the client. This is bad advice, in my humble opinion, because financial advisors are trained to assume any role in order to gain the customer’s trust. There is no guarantee that they will act with your best interest at heart. It would be much better to treat them as equals and demand total transparency.

How To Find A Personal Financial Advisor

Shelly Banjo’s good advice is to go to, a site that holds the records of people employed in the finance industry, which includes whatever disciplinary action taken against them. Still, a reference by a trusted person may work better, as long as you don’t fall prey to another Madoff. On the other hand: “The problem with this compensation structure is that the advisors are influenced to sell you products that give them a higher commission,” says Crackerjackgreenback, a site dedicated to personal finance.

Do Not Pay Commissions to a Financial Advisor

Let’s check out the sharp differences between a stock broker and an investment advisor: “Remember that a stock broker must act in the employer’s best interests, and that you are not his employer. A Registered Investment Advisor, on the other hand, must act in a fiduciary capacity, i.e. in the clients’ best interests,” warns the blog, Key Financial Solutions. They add something that we should remember if we are planning to hire a financial advisor when we are faced with a large inheritance: “Members of the National Association of Personal Financial Advisors are strictly fee-only planners who sign a Fiduciary Oath.” Do not use somebody who is paid a commission as a financial advisor. Fee only is one of the ways you’ll prevent unnecessary transactions made to your top discount brokerage account and you’ll save yourself a lot of grief (and green stuff, too). So make sure you ask (don’t be shy, it’s your money) how your planner is going to be paid and then choose the one that appears to be trustworthy. But don’t give him/her full power of attorney and always check the books regularly to keep him/her honest.

If you enjoyed this post, you can get free regular updates through our RSS Feed, or you can have our latest posts delivered to your email inbox by supplying your address here. Your address will only be used for this purpose, and you can unsubscribe anytime.

{ 0 comments… add one now }

Leave a Comment