Commentary by Adam Cmejla
Evaluating and hiring a financial advisor to serve you and your family and handle your financial affairs is a very big decision and one that should be decided with much due diligence and intention. The next two columns, I’ll go over some questions that can be used as a guide when interviewing potential advisors to serve your family.
How did you find the advisor?
Think about how the advisor came into your life. Was it through an advertisement in a publication or direct mail piece? Did you accept an invitation to a free dinner and sit through an educational workshop? Was it through a referral from a trusted friend or colleague that has an existing relationship with the advisor? Direct mail and workshops are not bad, but just know that there’s a reason that the advisor is hosting workshops or buying advertising spots. Is it to sell you something or is it truly educational in nature?
Why is that person in the business?
This is an important question that I think every advisor should know to their core and every client should know about their advisor. In my opinion, understanding the “why” of this business is just as important as the “how.” What is their intention in working with clients? Being clear on who they are and how they serve their clients can be a good indication on what to expect.
What professional designations do they have?
According to the Financial Industry Regulatory Authority, the self-regulated, not-for-profit organization authorized by Congress to protect American investors, there are 153 – count them, 153 – different designations that advisors can obtain to put after their name. The important thing to understand about these designations is the varying level of mastery that’s required to obtain them. By searching the list at www.finra.org, you can learn all about any designation that your advisor may have after their name. A CFP practitioner (certified financial planner) is considered by many as one of a few pinnacle designations in our industry and which requires experience prerequisites, extensive studying and demonstrated mastery of the subject material. (Full disclosure: I am not a CFP practitioner, but I am currently studying through the materials and plan to sit for the national board exams in November 2014).
How have they furthered their education?
Many people don’t know that the barrier for entry in our profession is relatively low, and that’s in part due to the high attrition that occurs in our industry.
Get the green light from a firm, study for a couple weeks or months for a few national securities licenses (which, by the way, are still written and governed by laws written in 1933, 1933 and 1940), and POOF – you’re now a financial advisor legally licensed to dispense financial advice to the general public.
The same is true for life and health insurance licenses, which are needed to offer other financial vehicles such as annuities and life insurance.
Make sure to ask the right questions about how long they’ve been in this business, what they’ve done to hone their craft, and if they’re new in the business, who else you’ll be working with to ensure that you’re working with a qualified team.
Being prepared with questions can help you make an intelligent and informed decision when looking to hire a financial professional.
Adam Cmejla, CMFC® is President of Integrated Planning & Wealth Management, a comprehensive financial services firm located in Carmel providing comprehensive retirement planning strategies to individuals near or in retirement. He can be reached at 853-6777 or firstname.lastname@example.org.