Confused about money?

In the aftermath of swan dives in both the housing and stock markets, many individuals are questioning their ability to manage their money on their own.  Banks, insurance companies, brokerage houses, and accounting firms are some of the many institutions offering financial advice. With so many choices, however, it can be confusing to figure out who to hire, especially if you are just starting out. Here are four questions you can ask to help find the financial advisor that’s right for you.

(1) HOW DO YOU GET PAID? A good financial advisor should be able to answer that question easily and directly.  If the person can’t look you in the eye, hems & haws, or gives you some complex answer… run, don’t walk, away.

  • Here are the various ways an advisor typically gets paid: (a) commissions on products that your advisor recommends, (b) a percentage of your assets under management, (c) an hourly rate. {Note, I prefer the last two.}
  • Don’t you have to be really rich to hire an advisor? Yes and no.  Percent of asset advisors often have a $500,000 or $1,000,000 minimum asset level (the economics just don’t work for them at lower asset levels for all the services they provide). So if you are just getting started, I suggest starting with an hourly fee-based planner because they’ll work with you at any asset level.  It’s sort of like paying for personal training sessions for your money. To find an hourly fee-based financial planner in your area you can go to or

(2) WHAT PROFESSIONAL CREDENTIALS DO YOU HAVE? Anyone can call themselves a financial planner.  My favorite answer for someone who is going to advise you on the nuances of your entire personal finance situation is one of these: CFP (Certified Financial Planner),  CPA-PFS (Certified Public Accountant – Personal Financial Specialist,  CIMA (Certified Investment Management Analyst), or CFA (Chartered Financial Analyst).

(3) HOW OFTEN DO YOU MEET WITH YOUR CLIENTS? I like to hear three to four times in the first year of the relationship and one to two times a year after that.  You’ll also want to ask what kinds of things they will talk with you about during these reviews.  Good answers include: your income, your expenses, your goals, and your worries – not just how much money you have to invest!

(4) CAN I TALK TO SOME OF YOUR EXISTING CLIENTS? You earned your money with your life energy so take the time to protect it by doing your homework. I suggest asking for three existing client references. I also suggest talking to three different advisors before hiring one.

What other question would you add to the list?