WHAT TO LOOK FOR IN A
FINANCIAL ADVISOR
Putting the bottom line first, a dentist needs a financial
advisor who has an impeccable background and professional record and who puts
the client’s interests first, above his or her own. Additionally, the dentist must have gut-level
trust and comfortable communications with the advisor. Following are several ways to make sure your
advisor is serving your best interest.
Hire a CFP
(Certified Financial Planner). Out of
the alphabet soup of designations following an individual’s name which indicate
expertise in different areas of financial planning, CFP guarantees a strong level of education plus significant
annual CE requirements and higher ethical standards than the industry norm.
Avoid advisors who work on commission, instead choosing a
fee-only professional. Distinguish
between a fee-only and a fee-based one. Fee-based indicates the advisor charges commissions and
fees. Fee-only advisors charge based on
the amount of assets managed, typically starting at 1% of the total, declining
as the assets appreciate so that the amount managed increases.
Interview a potential advisor in person after doing a
background check. Ask to see the
candidate’s ADV form which is similar to a resume but also lists any disciplinary
actions taken against the candidate. Go
to adviserinfo.sec.gov to peruse
records of disciplinary actions. Seek
opinions from other practitioners who work with this advisor, and listen
carefully to their opinions and advice.
During the interview, clearly agree upon the services to be
provided, the schedule for meeting with the advisor, and the fees to be
charged. Ask if the advisor will
initiate contact with you in case of law or regulation changes or other
conditions that might affect your taxes, investments, or retirement plans.
Only after these steps prove positive is it wise to sign a
contract with the advisor. Keep in mind
that this person will affect your and your family’s financial welfare now and
in the future, including retirement. The
bottom line, as stated at the beginning of this post: once you find an honest, ethical professional
with a proven track record, a trusting, comfortable relationship with him/her
is a MUST. If the time comes that you
feel disquieted or uncomfortable with the advisor and his/her advice, it is
time to change to another professional.
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