Finding a Financial Advisor

If you are considering getting professional help with your investments, you are NOT alone. Although the media constantly suggests that the average investor can and should “do it yourself,” the fact is most people want assistance. They are too busy and their money is too important to just go it alone. But, the problem they face is finding the right advisor. Many investors are wary of advisors, and rightly so, because the financial services industry has made it very difficult for the consumer to identify truly unbiased, qualified advisors.

Despite all the attention given to do-it-yourself investing, a recent study by Charles Schwab indicated that only 15% of investors want to do it themselves. These are the people who have a real passion for investing. They consistently read Barron’s and the Wall Street Journal, watch CNBC and Bloomberg television on a daily basis, and do their own research using independent sources such as Value Line, S&P, and/or Morningstar. But, they are the select few. For most people, their daily lives are too demanding to keep up with all of the relevant issues.

Since the vast majority of people say they want or need professional help, why do the media insist do-it-yourself is the way to go? Traditionally, investors seeking help used brokers. This method of delivering service was and still is a sales-oriented business, often with high commissions or fees. The do-it-yourself philosophy emerged as an alternative to those high costs and conflicts of interest.

However, the needs of investors have changed over the last few decades. The disappearance of corporate and government pensions and the emergence of self-funded retirement accounts have placed greater financial responsibilities on individuals. With large balances in 401(k) plans and a long life expectancy to plan for, the stakes are high. Individuals cannot afford to make mistakes. More and more people want and need advice they can trust.

Fortunately, need, competition and opportunity combined to bring new types of advisors into the marketplace. Today, it is possible for individuals to get quality, unbiased help, at a reasonable price. The problem is in finding it.

So what is an investor to do? There have been a few consumer and regulatory organizations that have tried to help with excellent publications on how to choose and monitor a financial advisor. These include:

  • American Association of Retired Persons (AARP.com)
  • National Association of Personal Financial Advisors (NAPFA.org)
  • Certified Financial Planner Board of Standards (cfp.net)


We think the three most important considerations in choosing an advisor are:

  1. How are they compensated? — If the advisor is receiving payments from anyone else other than his/her clients, then the advisor’s interests are most likely in conflict with yours. To avoid such conflicts, work with a fee-only advisor.
  2. Are they a “full service” advisor? — A full service advisor will provide sophisticated retirement and estate planning, investment management and tax services under one roof. Only 12% of advisory firms offer all of these services. You may not need all these services right away, but sooner or later you will.
  3. Do they have enough support? — No single professional has all the expertise needed to handle all the financial issues you will face. Look for a firm that employs several individuals with different areas of expertise who have worked together for years.


If you are not one of those few, true do-it-yourselfers, quality affordable advice is available. To find it, rely on the guidance of trusted organizations, such as AARP, and be sure to ask the right questions.