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How to Find a Good Financial Advisor Part 3

I have created this series on how to find a good financial advisor [1] since many people are looking for advices on their financial situation and can’t find a trustworthy consultant. Since I have worked with hundreds of consultant of any kind (private financial planner, investment specialist and life insurance agent), I have a good idea on how to select the good cherries from the rotten tomatoes! The sad truth about this industry is that financial institutions are putting a lot of pressures on sales.

Therefore, they are more likely to hire car salesmen [2] than real good financial agents. In addition to that, there is a huge part of the pie taken by independent / self employed individual who are able to pay their bill at the end of the month only if they are able to sell something to someone during that time frame. Unfortunately, you will find a lot of crook in this industry.

However, I don’t think it is worst in the financial industry than any other one. The only difference is that the way you manage your money has a much bigger impact on your life than the way you buy a dishwasher!

Taking the decision of giving away a part of your money to be managed by somebody else is a really important choice in your life. Therefore, you should see more than one person before deciding who will be in charge of your portfolio. For your first meeting, I think you should prepare yourself as you were a manager hiring an external consultant. After all, this “money specialist” will work for you. You will give him the important mandate of managing your investments, looking over your budget and maybe answering your needs in term of life insurance. Don’t forget that he is working for you. So you are in right of asking him any questions you find relevant.

For example, I wrote a few ones in order to give you an idea as of where to start your investigation:

– For how long have you been in this industry?

– Do you have any financial education background? (ie. CFP Title [3], Bachelor degree in finance, MBA [4], etc.)

– Why are you working for this Bank / Investment Firm / Insurance Company?

– Have you ever work for Primerica [5]? (just kidding! The Company has nothing to do with the quality of your advisor, there are good financial consultant everywhere)

– Why are you working as a financial advisor?

– What is your investment philosophy?

– What is your income structure? (by law, they have to tell you if they are commission based, salary based and if they have any incentive to sell one product more than another)

– Can I get reference from 2 of your existing (and hopefully satisfied!) clients?

– What would they tell me about you?

– Why should I choose you and not another one?

– What is your “unique value” proposition? (what are you offering, what is your added value as a financial consultant)

– What are your work methods (how often you do your follow-up? Are you going to call me when my investments are up? Are down?)

Tricky question:

“I’m ready to invest now, what is the best product you can offer me?”

If you financial dude answer to this question right away on the first meeting, show him the door right away. The first meeting should be one to get all the information on your financial status, your investment profile [6], your personal financial goals and answer your questions. An advisor offering you investment product as soon as you open the door is there to sell you something, not to look over your financial situation.

One last point is to mention that if your financial consultant is not giving you straight answers, keep asking the same question until you get the answer. If he does it too much, it probably means that he has something to hide… I don’t think this is what you are looking for!

I have still more things to say about how to find a competent and honest financial advisor [7] but I will keep it for other posts. Stay tuned!



Other post on this series:

How to find a good financial advisor part 1 [1]

How to find a good financial advisor part 2 [7]

How to find a good financial advisor part 3 [8]

How to find a good financial advisor part 4 [9]


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9 Comments (Open | Close)

9 Comments To "How to Find a Good Financial Advisor Part 3"

#1 Pingback By The Financial Blogger | How to Become a Certified Financial Planner (CFP) On July 11, 2008 @ 6:01 am

[…] a good idea to tell you what is required to have this title so you can recognize the work behind a good financial advisor. In my quest to become an excellent financial consultant, I think that having this title is one of […]

#2 Pingback By Credit Card Brains » Carnival of Personal Finance #161: The “Feeling Renewed” Edition On July 15, 2008 @ 12:53 pm

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#3 Pingback By The Seeming to Always Be on Tuesday Monday Linklet « Are You Going To Be This Way The Rest of The Time I Know You? On July 22, 2008 @ 2:05 pm

[…] Financial Blogger’s third installment in the How to Find a good Financial Advisor series. Well worth […]

#4 Pingback By The Financial Blogger | How to Find a Good Financial Advisor Part1 On August 10, 2008 @ 7:53 pm

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#5 Pingback By The Financial Blogger | How to Find a Good Financial Advisor Part 4 On August 10, 2008 @ 7:54 pm

[…] then I suggested your advisor should be proactive. Then I got more specific in the type of questions you could ask your financial advisor. This post is about knowing what you are looking for and asking for […]

#6 Pingback By The Financial Blogger | How To Find A Good Financial Advisor Part 2 On August 10, 2008 @ 7:55 pm

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#7 Pingback By The Financial Blogger | How to Find a Good Financial Advisor Part 5 On August 11, 2008 @ 6:01 am

[…] How to find a good financial advisor part 3 […]

#8 Comment By mel On September 9, 2008 @ 5:57 pm

There is a lot of good advice here, I would also add that you should work with a financial advisor who has expertise with your specific situation. There are financial advisors who focus only on teacher’s and their pension plans, or only on doctors, or who work with small business owner clients.

#9 Comment By Michelle Boudreau On October 12, 2009 @ 1:04 pm

I like your post. No matter what amount of debt a person has, willingness to retire is the first step