How to Select a Financial Advisor

Five Parts:Starting Your Search with a ReferralAsking Questions of a Prospective Financial PlannerUnderstanding Financial Advisers’ CredentialsVerifying the Adviser’s RecordLearning More About Financial Planning

Working with a financial adviser can make it easier to understand your financial options and help you invest wisely and plan for the future. It's important to find a financial adviser whose skills and experience are compatible with your financial goals. Learn how to select a financial adviser who will benefit you and help you handle your money wisely.

Part 1
Starting Your Search with a Referral

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    Ask friends you trust. Probably the first place to start looking for a financial adviser is by asking your friends and colleagues for suggestions. If someone you know is happy with a particular adviser, then there is a pretty good chance that you would be happy as well.
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    Talk to your attorney. If you have an attorney whom you use regularly for business purposes, ask if he or she can recommend someone. Legal work often overlaps with financial work, so you may be able to find someone good this way.
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    Do some research online. A simple online search for “financial adviser near me” will bring up a range of advertisements and articles. Sift through the advertisements carefully, but use the information to find people who are in your area. You are also likely to find reviews and news stories about particular individuals who stand out in the community.
    • Some professional organizations may be able to help narrow your search. The National Organization of Personal Financial Advisors has a search tool at You can also use BrokerCheck, a service of the regulatory agency FINRA (Financial Industry Regulatory Authority) to search, using your zip code, for individuals or firms that are near you. That search tool is available at

Part 2
Asking Questions of a Prospective Financial Planner

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    Ask about the person’s experience, particularly with people similar to yourself. Dealing with individuals is different than managing funds for corporations. Families with children have different needs than retirees. When you are selecting a financial adviser, ask about experience with people in your situation.[1]
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    Investigate the individual’s education and employment history. Consider this a sort of job interview, and you are the employer. Feel free to ask these questions to make sure that you get someone with a solid background. If the individual is unwilling to treat your first meeting as an interview, then he or she is not likely to be as communicative as you may want once you start working together.[2]
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    Check into the broker's licenses and registrations. In addition to the designations and education, ask about other professional associations. Specifically, check if the planner is registered with the SEC and/or FINRA, which are the regulating agencies in this field.[3]
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    Ask about specific products and services that the adviser offers. Giving financial advice is different than actually buying and selling mutual funds or making investments on your behalf. Decide what services you need, and then make sure that the person you are considering can provide them.[4]
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    Find out the cost and any “hidden” fees. It may seem embarrassing to come right out and ask, but it shouldn’t. Ask if the adviser expects to be paid a flat fee, an hourly rate, or a commission on your investments. Ask about his or her billing procedures, and make sure that you understand it. You don’t want to be paying for something and not understand why.[5]
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    Investigate any prior disciplinary activity. Again, this may seem uncomfortable to bring up, but it is a part of the business. A recent report says that about 1 in 15 financial advisers have misconduct records.[6] You don’t need to turn down everyone with some history, but you should know what happened and then be able to decide if that is important to you.[7]

Part 3
Understanding Financial Advisers’ Credentials

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    Ask about the potential adviser’s credentials or designations. Just because someone claims to be a CFA, CFP, CIC, or something else, may or may not mean anything useful. In the financial field, these abbreviations and the titles they represent are referred to a designations. A financial planner can earn one or more designations by completing certain training and passing certain exams. You should ask about the person’s designations and select someone with the training and expertise that best matches what you need.
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    Select a CFP or ChFC for general financial advice. Someone with the CFP (Certified Financial Planner) or ChFC (Chartered Financial Consultant) designation is generally educated on a range of financial topics, including stocks, bonds, estate planning and financial planning. Such a person can actually help you make financial decisions based on your own needs.[8]
    • The CFP Board of Standards, Inc., oversees planners with the CFP qualification, and will revoke the credential from anyone who fails to uphold its standards. You can check with the CFP Board to verify someone’s credentials.[9]
    • The ChFC designation is issued by The American College of Financial Services after extensive study and coursework on a range of subjects. To verify a planner’s standing with The American College, go to
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    Select a CFS to help with mutual funds investing. CFS (Certified Fund Specialist) is a designation that is awarded by the Institute of Business and Finance.[10] A CFS can best help with identifying the strengths and weaknesses in mutual funds, and can make sales and purchases for you as well.[11]
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    Look for a CPA with a PFS designation. Most people are familiar with the CPA title (Certified Public Accountant). Most CPAs will assist with taxes, financial records or other accounting tasks, but are not fully qualified to provide financial planning advice. The PFS (Personal Financial Specialist) designation indicates a CPA who has taken additional training in order to provide personal financial planning advice.[12]
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    Consider other designations for more high-level financial planning. If your financial portfolio is quite large or you are working through a larger financial planning firm, you may wish to look for someone who holds a CIC, CFA, or CIMA designation.[13]
    • Select a CFA (Chartered Financial Analyst) for institutional money management and stock analysis.[14]
    • Select a CIC (Chartered Investment Counselor) for larger portfolio management. This is a more specialized designation, which only someone who is already a CFA can obtain.[15][16]
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    Consider a CLU for insurance issues. A person with the CLU (Chartered Life Underwriter) designation is already working as an insurance agent and has taken additional training to focus on pension planning, insurance investments, and some financial and estate planning.[17]

Part 4
Verifying the Adviser’s Record

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    Use the Investment Adviser Public Disclosure (IAPD) site. Investment advisers are required to file a report known as Form ADV that contains disclosures about any disciplinary events. You can search the registry of this information, by using the name of either the individual or his or her firm.[18] This is an official service of the U.S. Securities and Exchange Commission.
    • For technical assistance with using the IAPD, you can call 240-386-4848.
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    Use BrokerCheck. BrokerCheck is another online service to check the credentials, work experience, and disciplinary reports of brokers or investment advisers. This is a free resource, offered and managed by the Financial Industry Regulatory Authority, Inc. (FINRA), which is the agency that regulates the financial industry.[19][20]
    • You can also visit the website for general information on a wide range of financial topics.[21]
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    Call FINRA’s broker hotline by telephone. If you do not have access to the Internet, you can call FINRA at 800-289-9999 to check a broker or financial adviser’s record.[22]

Part 5
Learning More About Financial Planning

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    Read SEC Publications. The Securities and Exchange Commission is a branch of the U.S. government that oversees a great deal of financial investing. They regularly publish reports and pamphlets that may be helpful. Look for the following titles:[23]
    • ”Ask Questions” - this provides a series of suggested questions you should ask before getting involved with a particular financial adviser. It also provides some contact information to get help.[24]
    • ”Get the Facts: The SEC’s Roadmap to Saving and Investing” - this publication helps you set your goals, make a financial plan, and avoid problems.[25]
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    Read the AARP Financial Adviser Questionnaire. The AARP (American Association of Retired Persons) has developed a two-page written questionnaire. You can use this for your own information, or you can actually give it to a prospective adviser and ask him or her to complete it for you. If the adviser is reluctant to complete the questionnaire, then he or she may not be willing to communicate with you along the way.[26]
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    Search for financial planning publications online. At the website, you can search for a wide range of publications on financial planning issues. Use their search feature to look for documents by the Consumer Finance Protection Board (CFPB). Most of these items are free and can be ordered in print or viewed online.[27]

Sources and Citations

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Categories: Investments and Trading | Retirement