How to Find a Financial Advisor If You’re Not Rich

It’s not unusual for wealthy people to have a number of advisors.  The publication The Street points out “Wealthy investors are increasingly seeking professional guidance in money matters, with 82% of millionaires using a financial advisor in 2013.”

If you think about it, those really needing advice many times have difficulty finding it or affording it.  In a recent article in U.S. News & World Report, it was pointed out “it’s not always easy for the middle-class investor to find a financial advisor.”

There are also many financial advisors like Bank of America Merrill Lynch that have continually increased minimum investment requirements.  This has reduced the available resources for many people needing financial guidance.  Debra Speyer, a Philadelphia attorney says in the above article “It’s shocking that many brokerage firms won’t take clients with less than half a million dollars. It’s like a doctor who will only allow healthy people in his practice.”  Many times if they do take smaller investors, the fees are very high.

Another challenge is many investors are either confused or skeptical (or both) whether they’re getting unbiased advice, or advice inherent with conflicts of interest.  These conflicts could result from many circumstances, the most common being compensation to the advisor.  You need to know how the advisor gets paid, and don’t be afraid to ask them. The three forms of advisor compensation are commissioned, fee-based and fee-only.  We wrote about compensation and other questions to ask in a previous post called “Avoiding the Wolf on Wall Street.”

Another very important question to ask is which standard the financial advisor adheres to, fiduciary or suitability?  In the U.S. News & World Report article, Steve Lewitt points out “There are two standards of compliance in the financial industry, fiduciary and suitability. Advisors who carry a fiduciary responsibility are legally bound to do the very best for you, to put you first in all their planning and product selection. A financial professional who has a suitability requirement is legally bound to provide products that are suitable, but which may not be the very best for you.”

Lewit also recommends finding a financial professional who has a Series 65 license. “Any other licensing – for instance, a Series 7 or Registered Representative, carry suitability requirements. These folks are not called advisors and cannot do financial planning,” Lewit says.

So what should a middle-class investor do if they need financial advice?  Call us at Financial Freedom Planners and we’ll get you started in the right direction for you.

One of our trademark sayings is “It Doesn’t Take a Fortune to Build One,” and that’s our mission, one client at a time.

“If you want to work the rest of your life, that’s your business.  If you don’t, that’s ours.”

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About Charles Roberts, CFP®

Founder & CEO, Financial Freedom Planners™
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