If you could have Jessica Alba or Warren Buffett as your financial adviser, who would you choose? Nearly half of millennials said they’d pick the so-called Oracle of Omaha, according to a survey by the Insured Retirement Institute and the Center for Generational Kinetics. But more than 1 in 10 preferred to get financial advice from Alba, the actress and co-founder of The Honest Company. Another 32 percent would turn to Oprah Winfrey, and 4 percent said they’d choose NBA superstar LeBron James.
Of course, just because someone has a successful brand — or even a successful investing history — doesn’t mean he or she would be the right choice as your financial adviser. “These are successful superstars and [some] have successful companies, but I’m sure they have knowledgeable financial planners who help them … plan financially and diversify their money,” said Hans-Christian Winkler, a certified financial planner at Claraphi Advisory Network in New York City.
Still, mapping out a long-term financial plan, or even finding a financial adviser, can feel daunting to many — especially younger investors. In fact, 60 percent of millennials in the same survey said it’s harder to plan for retirement than to stick with a diet, and about the same percentage said they’d like to be walked through every step of the retirement planning process.
If you’re looking for someone to help you manage your money and financial planning, here’s what to keep in mind.
Know your needs. Think about your goals before you begin the search for an adviser. Maybe you’re just starting out and need help setting up a basic budget and financial plan. Or, perhaps, you’re a little further into your career and are wondering how best to invest the money you’ve saved. Finding the right adviser depends both on your specific needs and your financial goals.
Check credentials. Anyone can call themselves a financial adviser. But certified financial planners must pass strenuous exams to get their certification and adhere to afiduciary standard when providing financial planning, meaning they must put your interests above their own with their financial advice. If you are looking for specific investment advice, consider a registered investment adviser, an adviser who is registered with the Securities and Exchange Commission or a state’s securities agency and must also adhere to the fiduciary standard.
Be sure you’re clear on how they’re paid. Some are fee-based or fee-only, meaning they charge a flat fee. Others charge a percentage of what they manage and some are commission based. For a directory of CFPs, you can check the CFP Board’s site or the Garrett Planning Network, which lists more than 300 independent, fee-only financial planners. You can also find a fee-only adviser through the National Association of Personal Financial Advisors and look for an investment adviser through the Securities and Exchange Commissionor the financial information company BrightScope. Check to see if an investment adviser has had any disciplinary or regulatory problems, and be sure that he or she is registered or licensed, through the Financial Industry Regulatory Authority.
Test the chemistry. Once you’ve done your research, narrow it down to two or three advisers and try to schedule meetings with each one. (That should also give you a good idea of how accessible each is, too.) It’s a relationship like any other relationship: You want someone you can trust and are able to build up trust with over time. “I’m a big fan of the gut feeling [when choosing an adviser],” said certified financial planner Elizabeth Scheiderer for NCA Financial Planners in Cleveland. Ask them what kind of results you can expect under their guidance, and ask enough questions to make sure their services, values and products align with your goals.
“It’s almost like a first date because you are establishing that relationship” to see if you trust that person with your money and want to move forward with him or her, said Winkler. And, if it goes well, it could last a lifetime.