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How to Pick a Financial Adviser

Roger Wohlner

While I'm sure no kid sits on Santa's lap and asks for a new financial adviser for Christmas, this time of year it is fairly common for folks to make the decision to work with an adviser for the first time or to seek the services of a new one.

Here are a few tips for your search:

Know what you're looking for. Just as with any sort of shopping, it pays to have a list. The first question that I generally ask a prospective client is, "What prompted your call?" While it is OK to say generally to say you're confused about your overall financial situation and that you need guidance, think it through a bit more. Areas where financial planners generally provide assistance include:

--Retirement planning

--College savings


--Insurance and estate planning issues

--Tax planning

--Employee benefits and company stock issues

These and other issues are generally components of a comprehensive financial plan, which is often a great starting point if you haven't taken stock of your situation lately or perhaps if you are within sight of retirement and want to make sure that you are on track. Perhaps your needs are more specific, such as needing help with your investments or managing company stock grants.

Perhaps your need is situational, prompted by an event such as an inheritance. Are you looking for one-time help or do you want ongoing guidance?

Understanding what you are looking for will help you determine if a particular adviser is a good fit for your needs. For further reference, The National Association of Personal Financial Advisers (NAPFA) has a great piece on choosing an adviser on its website ( under the "How To Guide" tab.

Understand how the adviser is compensated. The three forms of adviser compensation are commissioned, fee-based and fee-only. Advisers paid via commissions are paid for the sale of investment and insurance products, such as mutual funds and annuities. Fee-based advisers may do an initial financial plan for a fee and then sell you commissioned products if you choose to implement their recommendations. Fee-only advisers are only paid via the fees they charge clients for their professional advice. This might be hourly, flat-fee, or based upon the percentage of the investments they are managing for you. I am a very biased fee-only adviser as I feel that it eliminates a huge potential conflict of interest that can be inherent in the sale of financial products.

Trust, but verify. Verify that the prospective adviser is not in regulatory trouble. FINRA's Broker Check database of federally and state registered investment advisers allows you to search by name, and lets you check up on firms as well. Several private services, such as BrightScope, have services to check an adviser's regulatory record. If the adviser is a Certified Financial Planner you can also look up their information at the CFP Board's website. None of this is a guarantee, but it is a great starting point.

Talk to the adviser and understand how a relationship with them would work. How often will you meet? What type of information will they provide? Have they worked with clients similar to you and with similar situations? For example, if you are a 35 year old you might not want to work with an adviser whose clients are mainly retirees. Finding the right financial adviser is important and is worth some time and effort on your part. Understanding what you are looking for in an adviser and asking good questions are a great start in this process.

Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. Read more about Roger here.

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