How To Find A Financial Advisor You Can Trust
When it comes to finding the right team to manage your finances, trust is everything.
But trust is more than just a gut feeling.
There are certain traits and characteristics you may want to look for to help you decide whether you should trust an advisor to help with your specific needs. But, like many things in life, trust is subjective and sometimes you just have to go with your gut instinct.
Aside from instinct, we believe your journey should begin with asking smart questions. But, how do you know what questions to ask?
Most people don't have experience constantly interviewing financial advisors. That's why a checklist of questions can be helpful from the start.
But there are additional keys to consider to find a financial advisor who is required by law to always put your interest first and one who has the competence to give you great advice in the first place.
While trust is subjective, here's how to potentially improve the chances of finding a financial advisor you can trust.
Ensure Your Financial Advisor Practices Under the Fiduciary Standard
When screening potential registered investment advisors or financial planners, the first thing you may want to determine is if they are a fiduciary.
The test should be an easy one—an advisor who is truly bound by a fiduciary standard will be willing to sign a fiduciary oath.
Signing a fiduciary statement is critical because embodying its tenets supersedes a simple statement or promise. An advisor who follows a fiduciary standard is bound by law to act in your best interest.
There are other standards of practice that don’t require strict adherence to the fiduciary standard, such as the new “Regulation Best Interest”, or Reg BI, that brokers are held to.
The name can be confusing because there are four key components that brokers must adhere to including 1) Disclosure obligation; 2) Care obligation; 3) Conflict of Interest Obligation; and 4) Compliance Obligation. You can learn more here. It may be difficult for investors to understand the difference between a financial advisor serving as a fiduciary and a broker serving under the "Regulation Best Interest" standard.
Check Out Their Specializations and Credentials
Financial planners are not one-size-fits-all. Personal finance is a big topic and you want your advisor to be well-versed to support your specific set of needs.
Are you in your 50s or 60s looking for an advisor who specializes in retirement income planning?
Are you airline pilot?
Perhaps you're a business owner in need of an exit strategy.
Maybe you're a doctor who wants to start saving but also chip away at your massive student debt.
There’s an advisor out there for you. At Covenant Wealth Advisors, we specialize in in retirement income planning and investing.
Credentials can also be an indication of the advisor’s expertise and practice focus.
The CFP® is a well known designation within the industry.
A Certified Financial Planner™ will have a broad knowledge of all areas of financial planning and have demonstrated that competence through education, experience, and testing.
A Certified Public Accountant or CPA will bring additional tax knowledge which is paramount to sound financial advice.