Today on Money 911, I took a great question from a viewer who wanted to know how to go about finding and hiring a trusted Broker or Financial Advisor. Where do you start?
My very first rule when it comes to hiring a financial professional is to get a referral. There’s no reason to start your search from scratch. Most likely, you already know someone who has a great financial advisor. You just need to ask.
But who should you ask and what do you ask them? A logical place to start is with your accountant and/or your attorney. Most likely both will be able to offer you more than one referral. (If possible, ask each for at least three names.) Another great way to get an excellent referral is to ask the wealthiest people you know. They don’t have to be close friends. They could be people you respect–your boss, a friend of a friend, etc. The wealthier they are, the better, because the rich tend to have top-notch advisors, and the really rich tend to have the best.
Just asking someone if they like their financial advisor, however, is not enough. A casual question will generally get you a casual answer, and unless you press them most people will tell you that they “love” their financial advisor…along with their doctor, their hairstylist, their attorney, and whoever else you ask them about.
To get a useful referral, you need to go deeper by asking very specific questions:
- Why do you like your advisor?
- How long have you worked together?
- What specifically have they done for you?
- Did they provide a written financial plan?
- How often do they meet with you?
- Do they call you or do you have to call them?
- How do you pay them?
- Do they provide you with a performance statement that shows how much you earned or lost on a quarterly basis?
- Have you had any problems or complaints?
- How is their customer service?
- Will you be compensated for this referral? (This question should be directed to your accountant, attorney, or any other professional who provides a referral.)
If you don’t know any wealthy people, start your search by talking to friends of yours who seem to be good at making smart financial decisions. Chance are the reason they are doing well is that they have someone who helps them. So ask them who they work with. And remember to ask all of the questions above as well.
If you want to know more about hiring a financial pro download my Ten Golden Rules to Hiring a Financial Advisor audio program. This is a free resource on my site. (You’ll need the free version of RealPlayer to listen.) While you’re there, take a look at my Financial Advisor Questionnaire and my Financial Advisor Gradecard.