Do You Need A Financial Advisor?

Ernie Neve, CPA

March 19, 2020

Nearly every day, a client asks me for financial advice and, inevitably, one of the next questions is if I believe they need to retain a financial advisor. 

I know it’s a loaded question, but the truth is, the right financial advisor can be worth their weight in gold and the wrong one can ruin your retirement faster than you ever thought possible. 

Let’s take a look at what’s right and wrong in the world of financial advice…

For starters, there are a lot of the wrong kind of advisors out there.  I’m not going to name companies, but if you’re getting financial advice from a person who has a financial interest in the investment products you buy, rather than the returns you get, that should be a sign to not work with them.  (You’ll likely hear this referred to as a “Fiduciary” and yo0u need to make sure your potential advisor’s fiduciary responsibility is to you, not the company.)

Next on the list?  You need to be clear on your own goals and that those goals are within the realm of the specialties of your potential advisor.  I’ll take this one step further, if your new potential advisor insists they can “do it all” from retirement planning to business investments, to hand-holding high-net-worth individuals – they aren’t the one for you.  You really need to make sure you’ve got a specialist who is aligned with your goals. 

Another BIG challenge?  Simply checking their credentials.  Are they who they say they are and how good is the certification they show you?  Is it a governing or educational body that no one has ever heard of?  Can they share testimonials or (admittedly a long shot) references?  Don’t forget, you’re entering into a long-term relationship here, so you have to be comfortable. 

Lastly, you have to understand how they will get paid.  I talked about this earlier, but it’s really imperative.  You’ll find advisors who are “fee-only” – where they get a flat fee to manage your assets, while others get a percentage of the total portfolio.  The worst, of course, are those that are paid a commission on the products and investments they sell to you.  Yes, it’s a glaring conflict of interest, but no one seems prepared to change it, so it continues to exist. 

The truth is simple:  You can find the right financial advisor, but you need to do some research.  This is a long term relationship and one that both of you will make money in, so finding someone who is competent and working for you is the only way to ensure you can actively grow your money without actively managing it. 

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Phone: (610) 278-8400
Email: eneve@nevegroup.com