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Looking For Your
Financial Advisor
The best financial adviser you'll ever find is staring
back at you in the mirror, but if, upon further
reflection, you opt to hire one, here's how to make
sure you hook up with someone top-notch:
Get three names.
Ask friends and colleagues for referrals, and gauge
how enthusiastic they are about their planner. Don't
be swayed when a friend says, "My adviser is a
really great woman! You'll love her!" Who cares
if she has a sparkling personality? This is strictly
business: Does the adviser make smart investment and
financial planning suggestions? Does your friend hear
from her all the time, even during down markets?
That's all that matters. If you can't rustle up any
solid referrals from friends and colleagues, visit the
Financial Planning Association website, fpanet.org,
and the National Association of Personal Financial
Advisors website, napfa.org.
Do the research.
Find out what sort of return the adviser's
recommendations have delivered. The returns should
have earned at least three percentage points more than
a bank CD. For example, if over the past three years
(long enough to get a fair picture of the adviser's
investment talent), your friend could have earned 3
percent annually in a bank CD, the adviser's stock
picks should have generated average annual returns of
at least 6 percent.
Schedule a meeting.
You should meet at least three potential advisers in
person. You can start sizing them up on the phone: If
you are married or in a life partnership, the adviser
should make it mandatory that both of you come to the
meeting. A good adviser understands how important it
is to know your emotional and financial needs. And
give the adviser's office a once-over; if someone you
are going to entrust with your finances can't keep her
own records and documents in order, do you really
expect her to take care of yours?
Listen for key information.
If you walk in and the first thing the adviser asks
you is how much money you have to invest, walk out.
She is interested only in making a profit off you, not
in working with you to build a strong financial
future. An adviser should ask about your goals, your
job security and health, whether you have a will or
trust, if you currently own a home or plan to in the
future, and what your outstanding credit card debt is.
If you have children, the adviser should talk to you
about life insurance and what your plans are for their
college education. A smart adviser will ask if you
expect to receive an inheritance or whether you
anticipate needing to provide financial support for
your parents. And when the conversation comes around
to investing, she should ask questions that gauge your
timeline (e.g., do you need to access your money in
five years or in 30?) and your tolerance for risk. A
professional will tell you her fee structure up front.
Advisers are paid either by commissions they get from
financial products you purchase or from flat fees you
pay them regardless of what you buy. It's best to work
with fee-only advisers; advisers who rely on a
commission have a conflict of interest.
By Suze Orman
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