Deciding to work with a financial advisor is an important decision. Working with a financial professional means optimizing opportunities and taking advantage of planning strategies you might not have been aware of. A financial advisor should be a trusted partner you reach out to for advice and guidance when you’re faced with hard decisions.
The search for a financial professional can be overwhelming. There are a lot of advisors out there, and unfortunately, not all of them conduct themselves ethically or are held to the same standards. So, how can you make the most informed decision? Here are three criteria to consider when deciding on a financial advisor:
1. Understand the Options
There are many types of financial advisors out there, including but not limited to:
- Investment advisors
- Financial planners
- Certified financial planners
- Financial consultants
- Portfolio and asset managers
Some overlap exists between the services each of these financial professionals offer. For example, an investment advisor might specialize in managing assets and investment advice. On the other hand, a certified financial planner might provide comprehensive planning strategies, including asset management, to help you reach your goals.
A financial advisor’s title can’t tell you everything there is to know about their services, but it’s a good place to start. If you’re looking for comprehensive financial advice, you may want to interview certified financial planners. If you’re looking for a more hands-off relationship with a financial professional who manages assets only, a portfolio manager might be a good fit.
2. Vet Credentials and Investment Philosophies
One of the most important steps you should take is vetting a prospective advisor’s credentials. The truth is, anyone can be a financial advisor, and some people don’t necessarily have the credentials or experience to do so.
As for credentials, we believe the CERTIFIED FINANCIAL PLANNER® (CFP®) designation is an important credential for advisors to carry, as this is earned after years of study, service, exams, and a demonstrated commitment to ethics. Other noteworthy credentials include the Chartered Financial Consultant (ChFC) and Chartered Financial Analyst (CFA®). Not all credentials are created equal, so make sure you know what a designation means when you see it listed after an advisor’s name.
In addition to vetting credentials and designations, you should consider whether a financial planner’s investment philosophy aligns with your values. You can usually find out about a financial planner’s philosophy on their website, but we highly recommend asking them directly during a consultation.
3. Choosing a Fee-Only Fiduciary
In general terms, a fiduciary is a person or entity with the power to act for another in situations requiring complete trust. By law, a fiduciary advisor must be completely transparent and always act in their client's best interests. They are also obligated to avoid and disclose any potential conflicts of interest.
For most financial planning services, we recommend choosing an advisor who is a fiduciary. It’s important to note that serving a client’s best interest also extends to ongoing services and investment monitoring. That means a fiduciary advisor’s job doesn’t end after the initial meeting or purchase. They must regularly review your accounts to help ensure your investments continue to be in your best interest.
Additionally, we recommend partnering with an independent advisor because, typically, independent advisors are not tied to selling proprietary financial products that could create conflicts of interest.
Partner With a Planner You Can Trust
Above all, you should partner with a financial planner you can trust. At Black Walnut Wealth Management, we help you coordinate every aspect of your financial life — from tax planning to risk management. We consider more than just your investments, so your financial strategy addresses the gaps that may leave you vulnerable. Some of the biggest mistakes are the ones you don’t see coming, so helping you avoid financial missteps is a core part of how we serve our clients. Schedule a 15-minute introductory meeting by calling us at (231) 421-7711 or using our online calendar.
Eric Braund is the Founder and Chief Financial Officer at Black Walnut Wealth Management, a financial advisory firm providing financial counsel and fiduciary investment services to individuals, families, and private foundations throughout the Traverse City and Northern Michigan region. He is a CERTIFIED FINANCIAL PLANNER™ professional and a Chartered Retirement Planning Counselor™ with 25 years of experience. He also has a bachelor’s degree in finance from Hillsdale College. Braund is passionate about offering services rooted in hard facts and sound reasoning combined with meaningful, long-term relationships so that his clients can experience less stress and have more time and energy to invest in what they love.
Braund is a Northern Michigan native who truly enjoys all the area offers, including hiking, biking, swimming, skiing, volleyball, and boating. He loves spending time with his family — his wife, Jodi, and his two children — and maintaining a balanced life. To learn more about Eric Braund, connect with him on LinkedIn.
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