Who is the best financial advisor for you?
If you are actively looking for a financial advisor, chances are you've asked a family member, friend or colleague who they turn to for help. This can be a good start to your hiring process, but don't make your decision solely based on a referral or who your family works with, conduct your own due diligence.
Find a specialist
When seeking a financial advisor you should consider finding one who works with people similar to you and has unique solutions based on your situation. For example, if you are a business owner or tech entrepreneur, you'd want to find an advisor who specializes in working with these types of clients.
A tech entrepreneur’s financial situation is often very different than say a retiree who is 75 years old and living on a fixed income. A tech entrepreneur's financial situation is complex and needs a comprehensive approach that touches on risk management, cash flow planning, diversifying wealth, and tax planning. It also helps to have an advisor who is well-versed in your profession, and can quickly understand how to approach your needs and add value.
Cheaper is not better
How much your financial advisor charges for advice is important to understand, but don't focus on finding the cheapest advisor or solution. The most important thing is that you reach your financial goals. Hiring an expert wealth manager can increase your odds of success, help you avoid pitfalls, and help you achieve greater outcomes.
The last thing you want is to hire a financial advisor that retires six months later. Or, one who might be stuck in old times. Consider hiring a financial advisor who is up with the times and plans to be in the business for a while, especially if you have a long time horizon.
Hire a fiduciary advisor
During your interview process, be sure to ask the financial advisor whether or not they are a fiduciary. A fiduciary is obligated to act in your best interest at all times, and your needs are put first. You would think that this is expected, but you might be shocked at how many financial advisors aren't operating under this standard.
Fiduciary advisors also have a different investing philosophy than non-fiduciaries, and do not sell financial products like annuities and commission based mutual funds. Instead, they focus on using low-cost funds and strategies without front-end commissions, holding periods, or termination fees. They simply do what’s best for you, not themselves or someone else!
Summary: It's important to find a financial advisor who is best suited for your specific situation. You can start by asking for a referral from family, friends or colleague. Ultimately, you should hire an advisor that works with clients who are very similar to you. Cheaper is not better. You should consider hiring an independent advisor who is a fiduciary.
Trent Grzegorczyk is the founder and principal of MICAPITAL, a registered investment advisor. Trent works with business owners, entrepreneurs, professionals, and high-net-worth individuals. Over the past 9 plus years, he and his colleagues have advised on over $3 billion in client assets. Trent enjoys cross country cycling, traveling, hiking, and resides in Traverse City, Michigan with his wife Alayna.