Selecting the Right Financial Advisor and The Right Accountant Firm
July 3, 2014

Selecting the Right Financial Advisor and The Right Accountant Firm

accountant firm

Selecting or replacing a financial advisor at an accountant firm that fits your needs is one of the most important financial decisions you will ever make. The individual you select will influence or regulate your investment decisions and the quality of those decisions will impact your long-term financial security, particularly your retirement years.

Your selection process has to separate the weak from the strong. You can succeed in making your decision by following these guidelines:

  1. Decide what type of advisor you want– There are four basic types of advisors:
    • Registered representatives (stockbrokers, investment representatives and bank representatives) are paid commissions to sell investment and insurance products. Their main sales licenses are Series 6 or Series 7.
    • Financial planners require no licensing, meaning anyone can claim to be a financial planner whether they are or not. Your selection process should limit you to only those who have earned a CFP, CPA/PFS or ChFC certification.
    • Financial advisors (Registered Investment Advisors and Investment Advisor Representatives) are financial fiduciaries who are viewed as having the highest ethical standards in the finance industry since they are reimbursed with fees.
    • Money managers have similar registrations and characteristics as financial advisors. Their unique feature is that they make decisions for investors in advance without their approval.
  2. Be objective – Use a process of elimination when selecting your preferred type of financial advisor. If you come across weaknesses, remove that advisor from your list until you narrow it down to just one. Focus on the advisors qualifications; don’t just select an advisor with the best personality and sales skills!

  3. Gather and compare data – Acquire the same information from multiple professionals so it is easy to compare their responses. Data gathering should center on information that impact competence, ethics, practices, and results. The following list is comprised of those elements where information should be gathered:
    • Credentials include experience, education, certifications and association memberships.
    • Ethics include a compliance record, criminal record, licensing, registration and fiduciary status.
    • Business practices include a track record, methods of compensation, expenses, types of reports and ongoing services.
    • Services include planning, investment advice, money management, insurance advice, tax advice and legal advice.
  4. Select advisors on the Internet – On the Internet you can maintain your anonymity and find public information that is not completely regulated by financial advisors or their firms. Expand your research using these methods:
    • Google the names of advisors and their firms. We recommend that you click through at least 20 of the hits you get.
    • Look for third party content that mentions the advisors or their firms such as newspapers, magazines and websites.
    • Use keywords to disclose problems. For example, combine the advisor’s name and the firm names with words, such as fines, scams, fraud, lawsuits, guilty, suspensions, FINRA and SEC.
    • Verify advisor and firm compliance records with FINRA and the SEC.
  5. Meet in-person – The key to a successful interview is to establish control from the very beginning. When you control the interview, you obtain additional information and insight that helps you make the right selection.

    Before you meet, organize an agenda and provide it to the advisors. It is easier to compare advisors when they answer the same questions. Also, require written responses to questions in the agenda.

    If the interview is in the advisors office, limit the interview time so you can have a chance to look at their staff and work environment. If interviewing from your house or office make sure that the meetings with the advisors are scheduled far apart so they do not see each other.

  6. Check references – Most advisors use references to validate their quality, performance, ethics, and business practices. To collect the most insight from these references, make sure you get the same basic information from each reference. For instance, ask about length of the relationship, types of services, amount of assets, service quality and why the client selected this advisor. Also, ask for information that may catch the reference off-guard. Remember that a reference is not a substitute for a track record!