What to look for in a financial advisor

A smiling couple- Greenberg Financial Group
July 13, 2020

There are several important areas of life where people can use guidance, and finance is one of the most common. With the help of a financial advisor, investors of all kinds can make informed decisions to protect and enhance their assets.

Since financial advisors in the Tucson area come with a cost, however, not just any will do. Investors need to find one with the right qualifications, credentials, education, and experience to help them successfully grow their savings.

How to Choose a Financial Advisor:

Doing due diligence upfront when selecting a financial advisor can set investors up for success later down the road. It’s not enough to find a person who simply calls themselves a financial advisor. According to an article for Forbes magazine, individuals wanting guidance on saving, investing, and portfolio management should look for these characteristics in each prospective financial professional they review:

1. Education and Experience

Professional financial advisors should have both an appropriate educational background as well as experience that demonstrates they can apply their knowledge of money matters to help develop financial strategies for investors facing a variety of circumstances. Investors can check on the website of financial advisors or get their detailed information from the U.S. Securities and Exchange Commission (SEC).

Websites such as brokercheck.finra.org/, run by independent regulator FINRA, and adviserinfor.sec.gov are free tools where investors can verify their prospective advisor’s credentials, including their background and experiences. These websites also list when an agency or advisor has been disciplined by the Certified Financial Planner (CFP) Board.

2. Certifications and Credentials

Certifications demonstrate that a financial advisor has made a concerted effort to stay ahead in the industry and up-to-date with best practices and procedures. The CFP designation is considered “the gold standard” in the financial planning industry, according to Forbes. To receive that certification, financial advisors have to complete extensive coursework, pass a six-hour exam, and accumulate three years of experience in the field. They also must complete 30 hours of continuing education every two years to maintain their certification. Other designations to look for are Accredited Financial Counselor (AFC), Certified Public Accountant (CPA), Enrolled Agent (EA), and Chartered Financial Analyst (CFA).

3. Standard of Care and Fees

Financial advisors provide valuable professional services. They are generally compensated through client fees, commissions, or a combination of both. For fee-based compensation, advisors typically use one of three pricing models: hourly fees, fixed/flat rates, or an assets under management fee, based on the percentage of assets they manage for an investor. Investors need to understand how a prospective financial advisor is being paid, and if there are conflicts of interest. For instance, when commissions are involved, it becomes more challenging for an advisor to stay independent, according to Forbes.

Additionally, investors should figure out what standard of care a financial advisor claims to provide. Some advisors adhere to a suitability standard, which means their recommendations need only be suitable for investors, not necessarily the best. In contrast, fiduciaries, such as registered investment advisory (RIA) firms, look out for their clients’ best interests above all else.

Selecting a Financial Advisor in Tucson

Whether a person is investing in a 401k for retirement or a broader range of assets and investments, it can be valuable to have a financial advisor on their team. Most importantly, they should ensure the individual or agency has a solid background that demonstrates expertise, along with the proper credentials, certifications, and standard of care. Greenberg Financial, based in Tucson, Arizona, provides a variety of portfolio advisory services to guide local investors in developing a financial strategy to help them protect and grow their savings.

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