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Anyone here have ideas on where/how to vet a financial advisor, especially for an older, retired couple?
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Greetings NeedHelp17 and welcome to The Motley Fool!

You ask:

Anyone here have ideas on where/how to vet a financial advisor, especially for an older, retired couple?

The most important thing is that you want to make sure the financial advisor is working for YOU, and not for a commission. Therefore, it's best to find a fee-based financial planner -- one who charges you by the hour, and will not be selling you products. Also, look for an advisor who has the Certified Financial Planner (CFP) designation. You can find a list of fee-based planners in your area at the site of the National Association of Personal Financial Advisors (NAPFA):

https://www.napfa.org/

In addition, here are a few links to articles from the Fool that will give you additional tips on finding one:

How to Pick a Financial Advisor
https://www.fool.com/personal-finance/2006/09/05/how-to-pick...

6 Questions to Ask Before Hiring a Financial Advisor
https://www.fool.com/investing/general/2016/03/19/6-question...

Make sure that you feel comfortable with the person, so you might want to interview several. Many will offer you an introductory consultation at no charge.

Hope this helps, and feel free to ask any additional questions you may have.

Warm regards,

Barbara Bayer
Home Fool
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To start, ask people like you if they can recommend a planner. You want to find a planner with successful experience advising clients in the same stage of life as you. Second, I'd make sure they have a fiduciary duty to you - to only recommend strategies and investments that benefit you first and not them. Corollary to that, fixed rate non-commissioned advisors who make money by selling you solid advice and not particular investments.

Here are a couple resources that might help:

It can be daunting to entrust your financial future to a stranger. And it's tough knowing where to turn for help because a changing marketplace has blurred the line between insurance salesmen and your stockbroker. So what should you look for?

http://money.cnn.com/retirement/guide/gettinghelp_basics.mon...

The National Association of Personal Financial Advisors (napfa.org) is a good place to start:

The National Association of Personal Financial Advisors (NAPFA) is the country’s leading professional association of Fee-Only financial advisors—highly trained professionals who are committed to working in the best interests of those they serve. Our rich history began in 1983 when a group of advisors simply wanted to serve their clients without muddling the relationship with commissions. Since then we have developed high standards in the field and each advisor must sign and renew a Fiduciary Oath yearly and subscribe to our Code of Ethics. It's all a part of the mission of NAPFA. The association provides support and education for over 3000 practitioners all over the country and is governed by the NAPFA Board of Directors and supported by our four Region Boards.

NAPFA members live by three important values:

• To be the beacon for independent, objective financial advice for individuals and families.
• To be the champion of financial services delivered in the public interest.
• To be the standard bearer for the emerging profession of financial planning.


Here's a couple more guides:

http://www.investopedia.com/updates/find-financial-advisor-p...
http://money.usnews.com/money/personal-finance/financial-adv...
http://twocents.lifehacker.com/how-to-find-and-hire-a-financ...
http://guides.wsj.com/personal-finance/managing-your-money/h...

I bet you'll discover a few themes common to all these guides.

Fuskie
Who would also use LinkedIn to discover clients in addition to any references provided who might be willing to give you their opinion...

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Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
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NeedHelp17,

Here are a couple questions that I would ask when involved with someone in finance.

1. How are you compensated? Conflicts of interest may be bad - at a minimum, they should be admitted. Are they compensated to buy/sell? If yes, they may buy or sell more frequently in order to pay themselves more - and at the same time, charge you fees. Also, the more selling is done, the more likely (in many situations) a higher tax rate is paid.

2. Are you a fiduciary? This means - is the person required to put your best interest first - you want the answer to be "yes."


TMFEdyboom223
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Fuskie-thank you (and thanks to the others who have replied). I see that a common group to review is NAPFA, and will check them out. Have you ever heard of myperfectfinancialadvisor.com? I just heard of them recently-we are searching for independent sites that vet advisors as this is a search for older in-laws.
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On the surface it looks like a reliable source but there are some questions I'd want answered first. For example, does an advisor have to pay a fee to be recommended? While they may make sure that no advisors have complaints before the SEC, what about the Better Business Bureau? Are the advisors recommended required to carry certification or bound to a fiduciary responsibility? Do they have verifiable testimonials from people who have found qualified advisors through the service?

I'm not saying this site doesn't do that, but there have always been businesses that make money off selling advertising or marketing resources. Once upon a time, businesses would buy listings in The Yellow Pages (millennials can google what that was). Today, we use national and local directory and rating systems, such as Tripadvisor and Kudzu and Angie's List. Industries have their own professional directories for legal services, construction, health, real estate and so many more.

Ideally, these services succeed or fail on the success of their referrals but that doesn't mean that individuals should check their self-interest skepticism at the door. Nobody cares more about your money than you do, no matter how much they tell you otherwise. And there can be unforeseen consequences when you register with these sites, such as your contact information being sold to members and mailing lists. I guess the message is just to be cautious and maybe use a temporary email address you can shut down if it becomes abused. :-)

Fuskie
Who once used a loan advisor site to see if he could get a better deal on a refinance he was working on with his credit union and received solicitation emails and phone calls for months after the refinance closed...

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Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
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Fuskie-thank you so much-these are all great questions to ask of such a service. Really terrific. Along these lines, ever hear of or use paladinregistry.com or wiseradvisor.com? Much appreciated!
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Hi Needhelp17!

I'm so glad to see you're getting some very Foolish suggestions here. I don't have much to add here except that I'm a firm believer in what TMFVenus said in her post:

The most important thing is that you want to make sure the financial advisor is working for YOU, and not for a commission. Therefore, it's best to find a fee-based financial planner -- one who charges you by the hour, and will not be selling you products. Also, look for an advisor who has the Certified Financial Planner (CFP) designation. You can find a list of fee-based planners in your area at the site of the National Association of Personal Financial Advisors (NAPFA):

In my opinion, this point alone will serve you well. :)

Best,
Tony
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Thanks TMF2!
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Anyone here have ideas on where/how to vet a financial advisor, especially for an older, retired couple?

Garrett Planning Network financial planners are all CFPs who charge only hourly fees, and do not take sales commissions or other compensation from anyone other than their clients. Because of this, you can feel comfortable that they are working for the client, and don't have other motivations. Their founder, Cheryl Garrett, wrote "Personal Finance for Dummies" and they offer a free download of Chapter 20 of the book on how to choose a financial advisor here:

http://www.garrettplanningnetwork.com/about/how-to-choose-an...

The chapter has a things to look for and questions to use when interviewing a planner. It's a really good resource.

AJ
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AJ, I hadn't seen that link before, and I think it's a great resource. I'm bookmarking it.

Thanks for posting that.

Best,
Tony
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Thanks much for this-will review!
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I have talked with a couple advisors who do planning who want to charge for the first meeting-any thoughts about this practice?
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It depends on what goes on during that first meeting. If there's material work being performed, then yeah. If it's just a get-to-know-you session, then doesn't seem like a good value. Ultimately, you have to go with your gut as to who you trust the most. If you don't get a good vibe from someone, keep looking. Sometimes you'll end up circling back to a FA who grows on you when you look closer at the alternatives.

Fuskie
Who thinks technically if you've discussed your situation over the phone, that could be considered a free consultation...

-----
Ticker Guide for The Walt Disney Company (DIS), Orbital ATK (OA), Titan International (TWI), Intuit (INTU), Time Warner (TWX)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
Fool Code of Conduct: http://tinyurl.com/FoolCode
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Thank you!
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Haven't read ahead, but I haven't seen Garrett Planning Network mentioned yet. They are all fee-only advisors. You can search their site by location to find referrals:

http://www.garrettplanningnetwork.com/

There are some that are both Garrett Advisors and members of NAPFA as well.
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Hi Needhelp17
Being a retired Fee-Only Certified Financial Planner, allow me to make a couple of recommendations in your search.

The term 'Financial Advisor' is unregulated. Anyone may call themselves that

Because this is a product-driven rather than advice-driven industry, it is filled with very good salesmen

For this reason, I would not ask family or friends for advice on their advisor, nor would I 'Interview' a prospective advisor. This would be like interviewing a car salesman in search of a new car. They are master salesmen..the good ones...and can easily turn your questions into manipulative sales. They are likely much better at this than you are.

You should be interested primarily in the prospective advisor's formal training, experience and how they are compensated. I would recommend you consider only Certified Financial Planners (CFP) or Certified Public Accountants with the Personal Financial Specialist (CPA/PFS) designation that have been active for at least 10 years. I would choose a compensation method that either pays them a % of Assets Under Management (AUM) of .5% to .75%, depending on the amount of investable dollars you have. But the least conflicted will be the Advisor who charges you on an hourly basis.

The two sources of such advisors are:

The National Association of Personal Financial Advisors (NAPFA), who typically charge a % of AUM, or better yet...

The Garrett Financial Planning Network, most of whom charge on an hourly basis

Both of these are CFP designees. If you are seeking investment advice, they will provide you with a copy of their ADV Part 2 form or a 'brochure' that will cover in narrative form all the information important to you. The ADV 2 form will tell you, in plain English, their history, how they are compensated, potential conflicts of interest, any disciplinary actions and so forth.

To find a CFP belonging to one of these organizations, just Google to them and find an advisor in your area. I would meet with them, but the purpose of this meeting is to fully understand the services you are looking for and to make sure your 'Chemisty' works. You will be exposing your sensitive financial information to this person, so make sure you're comfortable with them.

BruceM
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I would choose a compensation method that either pays them a % of Assets Under Management (AUM) of .5% to .75%, depending on the amount of investable dollars you have

Bruce,

How frequently ?

How often is the AUM normally recalculated ?

Terry
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Hey Bruce,

What a great post with very valuable and useful information based on your experience in the field. Thank you for adding to this conversation. I'm certain that Needhelp17 is glad he found this board.

I'm bookmarking this post for future reference.

Thanks again,

Tony
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Terry

It varies. In my travels, quarterly account reports will include a listing of the fee or fees paid to the advisory firm. The brochure should clearly spell this out, with examples of how the fees are calculated and paid. If, after getting and reading the Brochure, you are unclear on how the fee is calculated and paid, I'd keep looking.

BruceM
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AUM fees are typically quoted as an annual rate, but calculated and charged quarterly.

So if you had $1 million under management and the fee was .5%, the actual fee would be $1250 (1 million * .005 / 4) for the quarter. If the account grew to 1.1 million by the next quarter, the fee would be $1375.

The rate itself (the .5% of assets under management in my example) rarely, if ever, changes.

--Peter
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NeedHelp17

Interesting questions you've asked and thoughtful answers you've been given.

I'm a semi-retired Financial Advisor myself....and consider myself to be among the better (for my clients needs) of those of my brethren in this field.

Yet you will not find me at any site listed in this thread. You will not find me in trade magazines or in your local newspaper or on the favorite radio channel. So the questions I find myself asking this morning is how practical are the answers provided so far? Does everyone who asks about vetting a Financial Advisor need a a CFP? Or does membership in a national organization really serve as an effective screen as is portrayed? Does fee-based imply unbiased fiduciary advice? I'm not indicating that the answers to these questions are in the negative, just questioning whether the "common wisdom" answers and the gravitas the answers provide is as real as it appears at first blush....perhaps the answer is a resounding "YES!!"....but being a cynical old redneck, I just have to keep poking at the "conventional safe answers", for I have found that these kinds of questions are easier to ask and answer before a catastrophic market event than after one. [Sort of along the lines of an old wag in the investment business explaining that (this for example purposes only, not indicative of the merits, or lack thereof, of the company whose symbol has been chosen) the reason he recommended IBM to his client even though he, personally, didn't think the company's metrics were all that great, said "No one ever got fired for recommending IBM!].

Before I get into some specific questions I'd like for you and your spouse to consider, I wonder if you have read through some of the articles on the Fool?
https://www.fool.com/how-to-invest/thirteen-steps/index.aspx...
https://www.fool.com/retirement/index.aspx

You indicated in your OP that you were an older couple, so why didn't you have an Advisor before now? How adequately have you saved for retirement? How many years do you have left until retirement? How much debt do you have? Do you have discretionary income with which to save? If you have a demonstrated history of saving, what products are you familiar with (i.e. mutual fund categories in 401Ks, CDs, etc.). How much do you know about sound investing practices (company valuation, money management, value versus growth, the layering of fees and their impact on total return, etc.)? How much tolerance for market volatility have you found yourself able to tolerate if you have 401Ks?

There are lots of risk tolerance assessment questionnaires available on the internet, have you ever taken any of those tests? Here is a Google inquiry of "how to assess risk tolerance"....I would recommend taking 5 or 6 (at a minimum) and then think through what you've learned about yourself in the process....I would also urge you to have your significant other to take the same tests and later compare and contrast after she has taken time to digest her own answers. There can be a lot of tension between couples over the stress of financial accumulation, uncertainty of outliving one's wealth, and approaches to risk.....given such, it is better to discover and discuss these stress areas as early and as often as possible.
https://www.google.com/search?q=how+to+assess+risk+tolerance...

How much, per annum, do you expect a professional financial adviser to make for you on your money? Do you come from a long-lived family or one with a genetic predisposition to some ailments that have proven not only to be life threatening, but also expensive? How about your spouse?

Is you current home paid off? Do you have children in college that you are helping with expenses? Do you plan to move in retirement (i.e. retire from the northern climates and move to the southern)? Are you and your spouse currently frugal or living paycheck to paycheck? What vision do you have for travel, legacy, etc do you have for retirement and for your heirs? Does the age of the Advisor come into play for you? What I mean is that I've seen many seniors lose their GP doctor and never be happy again with the replacement they found, so if you go with a firm or person in an advisory capacity, what happens if they decide they've had enough and retire.....or are faced with a terminal medical diagnosis....will you be OK starting the search over again?

While a good to better-than-average CFP or member of the organizations listed in the responses will be asking you these questions (hopefully), it would be much better if you thought about them ahead of time and knew some of the answers (as honestly as any of us can answer some of those that deal with our own image of self versus what the rest of the world may perceive of us).

One question I haven't seen asked by this community, but would wonder were I to ever give up this field is: "How did that adivsor's clients fair in the dotcom crash and in the housing bubble crash?"

I don't expect you to answer these questions in this forum for much is personal, I just wanted to present them as your minimum psychological evaluation which seems to me to be every bit as important as who you choose.

One final thought: In your search you may find several advisors who individually impress you. You do not have to put all your eggs into one basket in that scenario....having several advisors may provide you with insights into the market and into yourself that a single one would not.
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