How to Select the Perfect Financial and Investment Advisor

By Daniella Rand

As you begin your search for a financial and investment advisor for the long term, take a moment to review the most important steps in the process of finding and choosing such a person (or team).

This is a decision that, ideally, you should only have to make once in your life. There is no sense in rushing it.

Fortunately, technology has streamlined the process of finding a financial advisor. We’re no longer limited by geography; many people work with financial advisors in other states, even other time zones. Performance and service are all that matters.

That doesn’t make the choice any easier, of course. Here’s how to select the perfect financial and investment advisor from a crowded field.

Daniella Rand

Evaluate Their Track Record Through Multiple Market Cycles

Begin by evaluating each candidate’s track record through multiple market cycles. Ask the following questions of yourself as you pore over their performance:

  • How do assets under their management perform when the market goes up?
  • How do assets under their management perform when the market goes down?
  • Do assets under their management consistently outperform the market?
  • Do they employ strategies to reduce downside risk and preserve buying opportunities during bear markets?
  • Do they constantly perform due diligence on funds and fund managers to ensure that their portfolios are as strong as they can be?

Understand How Much They Charge

Seek transparency in advisory and management fees. Don’t be afraid to ask directly how much the advisor charges. The answer may be more complicated than you would like, but the advisor should have no trouble providing a clear explanation of their advisory fees, at the very least.

Understand What You Get For Your Money

Work to uncover each advisor’s true value. How much are you getting for your advisory fees? Some hands-off investment managers do relatively little for their clients, other than periodically rebalance portfolios and take basic steps to implement an agreed-upon financial plan. You are entitled to a higher level of service.

Confirm That They’re Sworn to Act in Your Financial Interests

The best investment management professionals are fiduciaries. They are sworn to act in their clients’ financial interests, an imperative reflected in every decision that they make. As with your advisor’s value, you are entitled to this promise. Fortunately, fiduciary advisors are quite easy to find in the current environment.

Understand Their Investing Approach and Process

This is, perhaps, the most important step in the process. If you are not comfortable with an advisor’s investing philosophy and process, you should not allow them to manage your money. 

Ask for References

Any advisor seeking your business should have no qualms about providing client references. These individuals and families must be willing to provide unbiased feedback about the advisor’s performance. Even if their reviews are uniformly positive, they may shed additional light on the advisor’s approach in a way that helps you make a decision.

Finding the Perfect Fit 

Financial advisors are as diverse as the clients they serve. It is no exaggeration to say that, regardless of your investing objectives and tolerance for risk, the perfect advisor fit is out there, waiting for you to uncover them. Why wait another day to make the connection?