Some people put more thought into choosing an outfit for the day than they do in selecting a financial advisor.
They almost assuredly know that the one is far more important than the other, but feel there is no way of making a sensible choice.
However, the National Association of Personal Financial Advisors, on its website, offers a five-step approach for both simplifying the seemingly complicated process and providing some comfort along the way.
Those five steps at http://www.napfa.org/HowtoFindAnAdvisor.asp are:
- Have the conversation
- Select several advisors
- Do your homework
- Meet them
The conversation simply means sitting down with loved ones and determining a goal for seeking financial advice before even embarking on the search.
“Are you looking to simply invest or are you planning for one of life’s milestones like funding college of buying a home?” the site asks. “Know your goals will help as you look for an advisor.”
While the object of a search is to settle on a single source for financial advice, the association recommends initially gathering the names of several, from not only family and friends but also the organization’s website, NAPFA.org and GarrettPlanning.com.
Homework can be as simple as looking closely at the websites of financial professionals or being as thorough as examining issues of compensation, services and disciplinary history at the Securities and Exchange Commission.
“Contact each advisor and request a face-to-face meeting to discuss your goals and get to know the advisor,” step four suggests. “Use the meeting to ask questions and determine your comfort level.”
The review is used to look further down the road in what will probably be a long-term relationship, rather than focusing just on immediate investment performance.
The Wall Street Journal had this to say about the wisdom of choosing a financial advisor in the first place:
“You can certainly go it alone when it comes to managing your money,” the paper stated. “But you could also try to do it yourself when it comes to auto repair. In both areas, doing it yourself is a brilliant idea for some, and a flawed plan for many, many others. Mastering personal finance requires many hours of research and learning. For most, it’s not worth the time and ongoing effort.”