How To Find and Vet A Financial Advisor

Millennials are just starting to consider hiring financial advisors en mass, and many different types of financial advisory firms are starting to market specifically to young adults.  Some of these are online services like we've reviewed here: Vanguard and Betterment.  Others are more traditional firms, like Sophia Bera's Gen Y Financial Planning, but even these firms mix in some technology to assist in the process.

So, how do you find the right financial planner for your needs?  What type of financial planner do you prefer?

Here are some tips and tactics to find and vet a financial planner if you're a young adult or millennial. 

Which Type Of Financial Planning Firm Is Right For Me?

The first thing you have to decider when looking for a financial planner is - are you comfortable with the more "do it yourself" approach that online financial planning offers, or do you want to talk to someone and have a custom plan created.

If you're looking for some simple budgeting help, and don't have a very complicated financial situation, the online services like Betterment and Wealthfront could be a great choice.  These online services charge minimal fees, and offer you basic budgeting tools and other entry level financial planning options.  They can help you create, and help you setup a plan to achieve them.

However, if you're looking for more in depth help, or if you need someone to motivate you and hold your hand, finding a traditional financial planner might make more sense.

I equate this to the choice between taking online classes and in-school classes.  Both can be fine options, but it depends on your own personal learning style.  I am the type of person that needs to go to a location and sit in a class.  I have a hard time with online learning.  As a result, I know that going to a financial planner or at least spending that one-on-one time would make more sense for me compared to the online options. 

How To Find A Traditional Financial Planner

The next problem is: how do you actually find a financial advisor for millennials? This is the tough part.

First, I recommend that you ask friends and family - that personal connection will help you find someone that will fit your needs.  However, millennials typically don't know anyone else that has gone through the process.  As a result, you may have to search yourself.

I would recommend you start at these two sites: Financial Planning Association and the National Association of Personal Financial Advisors.  Also, you will want to make sure that you check the financial planner's certification and make sure that they don't have any complaints.  You can check for complaints at the Financial Industry Regulatory Association (FINRA)'s website Broker Check.

Also, I would make sure that your financial planner is a Certified Financial Planner.  You can check for their registration as a CFP here: CFP Board.  Jeff Rose from Good Financial Cents put's a great video together on why hiring a CFP is important.

How To Vet A Financial Planner (Questions To Ask)

Hopefully by now you have found some good potential candidates.  Now comes the hard part - vetting each candidate and finding the right fit.

I think it's important to rate a financial planner on two key aspects.  The technical side of their job, and the personal side.

For the technical stuff, you want to look at the following:

• How much they charge.  Stick to fee-based financial planners.
• What does the fee provide from a time/contact standpoint?  Is it one single meeting for 2 hours, or do you have ongoing consultations?
• What services they will provide.  Some planners only do investments, while others do comprehensive life/estate plans.  I prefer more comprehensive planners that will look at your whole life, not just your portfolio.
• What do you specialize in.  Some financial planners specialize in different areas: taxes, estate planning, etc.  If you're young, you want to find someone that specializes in getting started.
• Ask for samples of their work and what you will get as a deliverable.

Once you understand the technical stuff, you need to see how you fit with the advisor personally.  Consider:

• The rapport you feel talking to the person.
• Are you working with the advisor, or do you get passed around to different team members?
• Does the advisor actually look to understand your personal situation, or are they going through a generic plan?

It should also be very clear what their fees are - both what you pay to the advisor and what you pay as part of your investments. Check out this reminder on how honest financial advisors should disclose their fees.

Final Thoughts

The bottom line is that you need to feel comfortable with the advisor and the services you're going to get.  Don't assume - ask the right questions.  You don't want to pay money, spend your time, and then not feel like you've moved your finances forward after the meeting.

Have you hired a financial advisor or used a virtual financial planning firm?  What were your experiences?  Do you have any other tips for the rest of us?