I need an advisor but I just can’t find one.

This has been the compliant of small investors for many years. It is the complaint of those starting out and of those with some assets.

Often these investors run into the anomaly of the advisory/financial services industry: If one is beginning and really needs an advisor because one has little or no assets and a middle-class income, it’s difficult to find one. That’s because many advisors don’t believe they can make money from you since you have few assets. Like most of us, some advisors don’t think long term.

If you have much less need for an advisor, because you already have a lot of assets and a high income, then advisors will find you. You often don’t need them, but they will offer you wonderful deals.

Now You Need Us. Now You Don’t

This is the contradiction of the money management/advisor business. I recently experienced it firsthand. My wife and I recently sold our own second apartment, our investment apartment, and, after the closing, deposited three good size checks in our J.P. Morgan/Chase “high interest” (sic) money market account. It has a pathetically small interest rate. So we don’t keep a lot of our assets with the bank. The low savings rates are true with most banks, institutions that often take their retail, individual, customers for granted.

I only did so to get rid of the money for a day or so because I didn’t want to carry around the checks in a bad part of New York City.

About two days later, this money was moved to a Vanguard money market account, which was paying a more reasonable interest rate for the use of our money. But before I did, I received an unexpected call from my bank.

Chase Is Calling

I have been a J.P. Morgan/Chase customer for decades. It is a matter of convenience. There are Chase branches all over my city although their ATMs sometimes seem to break down. However, we usually keep a relatively small amount of our assets with them, maybe $10,000 or less. I had rarely, if ever, heard from them over decades. Now suddenly, since my account had a lot more cash in it, the people at J.P. Morgan/Chase became our new best friends.

So, with hundreds of thousands of dollars parked in one of their accounts, I was suddenly a somebody. I got calls from Chase people. But, in all the previous years I have conducted business with them—a checking and saving account as well as we finished the last few years of our mortgage with them when our previous mortgage banker went vaya con Dios—they looked at me as a nobody; not really worth their time. Now, suddenly, they loved me.

All those years when they might have helped me, they were nowhere to be found. Now it was so different. Now they seemed to realize that we had substantial assets.

So the people who could use the help of big financial institutions the most, can’t get them or get lousy services. I wasn’t surprised. It’s tough to find financial professionals to work with you, whether we’re talking about banks, brokerages or most financial institutions.

It has been my business for a good part of my life to write about services offered by various financial professionals, such as certified financial planners (CFPs), Certified Public Accountants (CPA), Registered Investment Advisors (RIAs) and brokers, often known as RRs (registered representatives), among others. How does one connect with them? How does one find good financial professionals?

Where?

Organizations such as the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA) will have lists of approved professionals. Try them. They will send you a list of people in your area who might be good for your needs.

At the end of this entry, I’ll name a few of the professionals I have interviewed over the years who I believe are worth your time. By the way, in every case, I have no professional relationship with any of these people other than I have interviewed these people for various publications such as Financial Advisor, Financial Planning, The New York Post business section or Savvy Retiree, among others.

In finding an advisor here are certain principles that should cover anyone you hire.

*Be sure the professional is a fiduciary

This is simply the legal principle that the professional puts the interests of the client before that of his or her employer. It may seem a logical assumption. However, don’t take it for granted. More and more of the financial services industry is moving toward this standard, but be sure the professional is always working in your interest.

*Ask How He or She Is Paid

It’s not only important how much the professional is paid—remember we have discussed how important it is to keep costs low if you expect to reach a goal—it is also important how the professional is paid. Is it fee only or fee and commission or possibly commission only?

These are important issues that are vital to the quality of service you will receive. Commissions are paid to some professionals every time a financial product is sold. That can motivate some financial professionals to ask the client to buy more financial products than necessary or to buy the wrong ones. Some financial professionals, for example, are never going to recommend that you buy low-cost products such as index funds. That’s because these products don’t usually generate a lot in commissions, which is the primary way some advisors earn a living.

Fee based compensation is usually better. It is based on how much the client has in an account. As the account grows in value, the value of the fee grows. Both parties prosper.

In general, this increasing the client’s wealth incentive is often the best way of paying the financial professional; of keeping the client’s and the advisor’s interests on the same page.

For instance, one percent of a $1 million account is twice as profitable to a financial professional as one percent of a $500,000 account. He or she makes more when the value of your account goes up as opposed to the professional simply being paid a commission every time a financial product is sold.

Fee based work is usually a much more sensible approach to compensating the professional and keeping the professional’s interests aligned with the client’s.

*Ask for Referrals and Then Some

Don’t just ask the potential advisor for referrals, also ask your friends and neighbors who have advisors. Ask how have their advisors worked out?

Will you feel comfortable with this person? What is she or he like? Does the professional have a regular schedule of updating your situation? Is he or she proactive in a time of crisis? For instance, the Covid crisis has caused all sorts of problems with markets. Has your advisor called to check up and update your situation? If your advisor doesn’t call you in crisis situations, then you should seriously consider another advisor.

*Have a Sample Session with a Potential Advisor

Let an advisor provide you with a free sample session. How do you connect with him or her? Do you feel comfortable with the professional?

Sometimes a professional is highly qualified but you just don’t connect with him or her. In that case, don’t be afraid to look elsewhere. In a strong financial relationship, it is almost as if you are getting married. In advisory services or in going to the altar be sure this one is the right one.

Check his or her record. Does this professional have a clean record? Check his or her ADV record, which tracks an advisor’s disciplinary history, among other things. The advisor should be able, and happy to supply these records and, if not, there is probably something wrong.

Finally, over years of business reporting for various publications, I have come across various professionals who I believe are outstanding. Their base of knowledge is considerable. They have many years of experience; they are ethical and I have always found these professionals to be very consumer friendly.

Here are just a few of them. One of these advisers might be right for you, but it all depends on what you need or what. One other note: No one is paying me a centavo to recommend them. I have not gone over with them what I am about to say. These are my honest impressions of their work based on years of dealing with them.

*Charles Hughes, CFP, Bayshore, New York, cghughes@cghughesco.com. is one of the founders of the financial planning movement. This was a movement that has brought credibility to the previously little known certified financial planner designation (CFP).

The designation, CFP, certified financial planner, now has become a professional standing of great distinction. That is in part thanks to the efforts of Hughes over more than 30 years. He is a man of high standards. If I weren’t a reporter, a reporter who had dealt with Hughes many times, and was looking for an adviser, he would be the kind of person I would want helping me manage my money and, more importantly, helping me to achieve various goals such as a secure retirement. The latter is one of his specialties.

*Bernard M. Kiely, Bernie@Kiely.com, CPA, CFP, Morristown, New Jersey is an outstanding professional. Again, I have known Kiely for decades. He is a person of great knowledge and has built his business into one of the best advisory services around. He offers a lot of free talks, trying to educate people in the basics of financial planning. He has a talk on credit cards that is outstanding. In fact, a lot of it is reflected in these pages.

*Anthony J. Ogorek (Prosper@Ogorek.com), CFP, Buffalo, New York

Again, I have known him for decades and he has provided commonsense advice for my readers on all kinds of money issues. He is very interested in debt and worried that many young people getting deeply into debt before they even begin their work lives. He thinks some universities are misleading young people about these student loans. Like the others mentioned here, he is a person of integrity.

What’s Your Credential?

I have only noted a few professionals here owing to space limitations. But, in my decades of writing about financial products, there are dozens, perhaps hundreds, of smart, capable people I could mention here. A key issue for me is knowing that, whichever professional you are considering, you ensure the person has a credential that qualifies him or her. Marks such as the CFP, certified financial planner, or a CPA, certified public accountant, mean that a professional is more than someone who is selling products or an employee of a big brokerage.

Professional marks usually mean that a person has gone through an extensive course of training to obtain those professionals designations and has to meet various continuing education requirements throughout his or her professional life to retain them. Anyone with a, say CFP or CPA, doesn’t want to lose that designation. And the person can lose those marks if he or she acts unethically.

These marks are as important to these people as the licenses for other professionals to practice law or medicine. These designations, or lack of them, are something very important in determining if the person is right for you.

 49 total views


Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post. The eBook version of his latest book "MoneySense" is available now for Free Download by clicking HERE

Leave a Reply

Your email address will not be published.