How to Choose a Financial Advisor
I believe that the best chance that you have to retire and to stay retired is to have a personal investment manager oversee your entire investment portfolio. The selection of your investment advisor should be just as important as the selection process of choosing your doctor. You should place just as much emphasis on making medical decisions as you do your finances. You should not place your trust in any financial advisor because they dress well, are a smooth salesperson, or work for a large organization.
A few years ago, the National Football League (NFL) created a Financial Advisor Program because they recognized that there were too many financial advisors who were unfit to provide investment advice. Many current and former players complained that they had lost their fortunes to investment advisers who hung out a shingle and tried to pass as a qualified expert. Most financial advisors claim to be an expert in something – banking, insurance, financial planning, taxes, estate planning, or retirement specialists. I believe that it is very difficult for you to distinguish between who is qualified and who is pretending. I believe the first step to select a financial advisor is to use the eligibility requirements set-up by the NFL, which is as follows:
- College Degree – Bachelor’s degree from an accredited four- year college (many financial advisors might not qualify!). I would personally add an MBA as a bonus but not a requirement.
- Work Experience – A minimum of eight years of relevant work experience and have relevant graduate education training in the field of expertise. I believe 10+ years is a more appropriate experience level.
- Professional designations – Certified Financial Planner, Chartered Financial Analyst, Chartered Financial Consultant, Chartered Life Underwriter, Certified Public Accountant, Certified Investment Management Consultant, Certified Investment Management Analyst, Chartered Mutual Fund Counselor (I would add most important are CPA, CFP, CFA, and a bonus if you have more than one of these designations).
- Other important qualifications – Insurance coverage or surety bond coverage, no past regulatory discipline, and no personal bankruptcy.
- My personal considerations (not NFL’s requirement) – If your financial advisor is managing your portfolio, they should be able to tell you the price and value off-hand of 100+ businesses and investments globally without looking them up on the internet. They should understand most major industries, macroeconomics, politics, finance, and have shown a personal track-record of success in life.
- More tips – Consider the financial advisor’s pay structure – avoid commission based advisors and investment professionals who are not fiduciaries. If your advisor is from a large broker, then they are most likely held to a lesser suitability standard and is not required to do what is in your best interest.
If retirement is important to you, then I believe you should take the necessary steps to screen and interview your advisor. Work with a financial advisor who spent over half of their life acquiring the knowledge and experience to provide you financial advice. You should not settle for anything less.
Please feel free to review my work experience, qualifications, and full bio here. I’m also open to any of your questions on my investment process and my investment philosophy to help give you the financial confidence to achieve your goals.
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Advisory services offered through Constant Guidance Financial LLC, a registered investment adviser.
