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Opinion: How to choose a financial adviser

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In obtaining financial advice, you must first understand you likely need a whole advisory team, not just a single adviser.

You may need a financial planner and an investment adviser, an accountant, attorney, business consultant and life insurance agent – and other risk management specialists.

Some professionals can fulfill multiple roles, but nobody knows everything about everything. But an adviser who can’t address a particular planning item should be able to refer you to someone who can. So, when evaluating an adviser, understand the scope of their knowledge and experience, the services they offer and don’t offer – and the depth of their bench, i.e., referral connections.

Meet with more than one candidate. Get to know them a little, and let them understand what your needs are. An informed second opinion on your investments may require more than one meeting, and it’s worth the time spent.

If an adviser has initials after their name, research those designations. Some require years of field experience, knowledge of a broad range of financial topics, extensive formal testing, a background check and continuing education on the ever-changing financial landscape. Others only require a fee and a couple of weeks of study and testing.

An adviser who has no professional designations may not be incompetent or unethical. But one who conquers the gauntlet of legitimate industry-standard credentials may be a better bet.

If you’re evaluating a securities-licensed adviser for stock and bond investments, check their experience and record of complaints at If they’re not listed there, they’re not securities licensed.

Some are insurance licensed instead, offering insurance-based investments, such as indexed annuities.

These two camps often throw stones at each other, steering clients away from certain products and toward – you guessed it – the products they sell. Some advisers are both securities and insurance licensed, and can discuss a wide range of products and concepts.

Ask your candidates how they’ll be compensated for investment and risk-management solutions they recommend. Insurance products – annuities and risk management products like long-term care insurance, life insurance, etc. – usually pay upfront commissions; for example, it’s 2.5%-6% for annuities. Stock market professionals typically deduct ongoing fees from your account, say 1%-1.25% per year, and often less for large accounts. Demand reasonable fees, as this is the biggest factor in investment success – not stock picking or market timing, which simply don’t work because they generate unnecessary expenses.

Ask questions until you get your head around any particular investment or risk management product recommendation. If you still don’t understand it, ask for alternatives. And understand why an adviser recommends one product or products over others: How is it in your best interest? Are there limits on account withdrawals? What are the investment risks? Do the potential risks match your emotional risk tolerance and your timeline? Some short- and midterm volatility may be acceptable in exchange for more long-term growth potential, but you must be able to sleep at night.

Is the estimated growth rate of a recommended investment sufficient to meet long-term needs? And how does the adviser know how much growth you need in the first place? Can they create an in-depth retirement analysis to estimate how your financial picture may play out over the long run? Can they run multiple scenarios to test how the premature death of one spouse or the other will affect income, for example?

Perhaps most importantly, be an informed consumer. Improve your own basic understanding of financial planning concepts, investing and risk management. There are many books and information online, but seek sources that don’t have a conflict of interest arising from their desire to sell you something. For example, some internet articles claim active mutual funds are better than low-cost index funds – but it’s generally mutual fund companies behind the “research.” Those supporting index funds are more often based on independent research studies, with no dog in the hunt beyond uncovering the truth.

Once you identify a good candidate, it’s gut-check time: Are you compatible? You must be comfortable enough with your adviser to spend a good deal of time across the desk from them. There’s an intangible quality to every relationship. You just know it’s right or not. On this point, follow your instincts.

Certified financial planner Kenny Gott is president at Piatchek & Associates and author of the book “Bottom Line Financial Planning.” He can be reached at


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