Need a Financial Adviser?

Pros recommend strategies for consumers in the market for a financial planner who will look out for their interests — not his.

Selecting a solid financial adviser can be as bewildering as negotiating a maze.

There are many types of investment professionals with different titles, duties, qualifications and forms of compensation. Some adhere to a code of ethics that requires them to be a fiduciary — someone who acts in the client’s best interests, not his own — but others do not. (Dodd-Frank phases in a rule requiring all financial professionals who deal with retirement planning to act as “investment advice fiduciaries,” beginning April 10 — but the Trump Administration is expected to shred that mandate.) You also have to determine the type of adviser who will best understand your needs and comfort level with risk — avoid planners who typically work with a particular range of assets that don’t match your holdings.

A good way to begin your search is to weed out the people who are not qualified to provide objective financial advice or serve as fiduciaries. Brokers, for example, buy and sell stocks, bonds, mutual funds and other products for their clients. They are not fiduciaries and are held to a lower ethical standard. They also receive commissions — payments for opening an account for a client or on the sale of a financial product by the company offering that product — and may persuade you to buy these products, whether or not you need them.

Investment advisers offer guidance on buying securities and manage them for their clients; but unlike brokers, they are generally not in the business of selling securities. They are also known as investment managers, wealth advisers, asset managers, wealth managers or portfolio managers. Registered investment advisers (RIAs) are firms registered with the Securities and Exchange Commission that uphold fiduciary standards.

A third category — financial planner — explores all your financial needs and helps you devise a plan to achieve long-term fiscal goals. “It’s important that a financial adviser be well-versed in more than just investments,” says Mitchell E. Kauffman, a certified financial planner and financial adviser at Kauffmann Wealth Management in Pasadena. “They should know tax planning, estate planning, retirement planning and managing risk. Our clients prefer someone who is more comprehensive, who can look at the whole picture instead of parts of it.”

Certified financial planners, or CFPs, are licensed and regulated by the Washington, D.C.–based CFP Board, which administers an exam to people who wish to earn the CFP designation. CFPs may provide the most objective financial advice because they are fiduciaries, many of whom earn a flat, hourly fee rather than a commission, so they have no incentive to sell their clients products they might not need.

The CFP Board’s website ( provides a list of certified financial planners, with their specialties and compensation methods as well as contact information. The National Association of Personal Financial Advisors, a group of fee-only professionals, similarly lists its members on its website (; you can also search the Financial Planning Association website ( for CFPs in your area. After you’ve compiled your list of names, use the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck ( to see whether any have been disciplined for unlawful or unethical behavior.

You can now select three or more CFPs and schedule interviews with them to determine whom you should hire. During these interviews, “the most important thing you are looking for, by far, is total and honest disclosure,” Carl Richards, a financial planner in Park City, Utah, told The New York Times. “If you get the sense someone is hiding things or avoiding your questions, move on.”

Some financial planning firms prepare lists of questions for prospective clients. Leah Snell, a CFP and the partner and managing director of Pasadena-based Snowden Lane Partners, has a three-page list of detailed questions designed to unearth information about a financial adviser’s business structure and qualifications, relationship management, investment philosophy and compensation.

Percy E. Bolton, a Pasadena-based fee-only financial adviser, has a questionnaire on his website to help you determine if a prospective financial planner holds to a fiduciary standard. The final question asks the planner to sign a fiduciary oath declaring s/he will act in the client’s best interests, will not receive any money contingent on a client’s purchase or sale of a financial product and will disclose any conflicts of interest that could compromise the planner’s impartiality.

Bolton maintains that determining a financial planner’s fiduciary status and form of compensation should be paramount concerns for prospective clients. You should ask the planner if s/he charges a flat fee or works on commission and find out how much the adviser typically charges.

Other key questions include:

• What experience do you have and how does that relate to your current practice? CFPs are required to have at least three years of financial planning experience.

• What licenses, credentials or other certifications do you have?

• What services do you or your firm provide? Financial planners generally cannot sell insurance or securities without the proper licenses, and they cannot provide investment advice unless they are registered with state or federal authorities.

• What types of clients do you specialize in?

• How do you plan to manage my money? “Advisers can range in investment ideology and it is important to understand the types of investments you would likely own, the risk associated with the investments chosen and the scope of how those investment decisions are made,” explains Alexander Leu, managing director at Pasadena-based Penniall & Associates. “Clients should always understand their portfolio and be educated by their adviser along the way.”

“Planning advice is also crucial,” Leu adds. “What type of planning advice will you be getting? Will it be included in the investment management or will you be charged a separate fee?” He says his firm shows potential clients the planning advice they will receive and sets expectations for how this advice will be delivered. “It is important to know if you are getting a real financial plan or simply a CFP spitting out some basic projections via a financial-planning calculator,” he says.

• How much contact do you have with your clients? Some financial advisers meet with their clients once a year to review their investments; others may meet every three months or more frequently. If you believe you need more support, you will want to make sure your financial planner holds frequent meetings and respondsto phone calls.

• Do you work independently or with a team? Some CFPs argue that a sole practitioner will provide more personalized service than a large firm. Leu, like others, says, “Clients should be looking for a team approach and a firm with many qualified specialists …You want to make sure that the adviser you chose has … professionals around him that can provide a sounding board for collaborative advice they deliver to clients.”

• Personal characteristics: The CFB Board lists seven key traits you should expect from a financial planner: competence, objectivity, integrity, clarity, diligence, compliance and privacy.

It is important that you feel comfortable talking to your adviser and believe he or she understands your needs and goals. “One of the biggest things that is often overlooked is a person’s ability to listen,” says Kauffman. “One thing I’ve learned in my training is if I’m saying two or three sentences in a row, I need to shut up.”

“The most important thing, in my opinion, is chemistry,” says Linda K. Polwrek, a CFP in the Pasadena office of Waddell & Reed. “Do you trust this person, do you feel comfortable sharing your hopes, dreams and certain details of your life with this person? Financial planning is a very intimate process. You share not only your hopes, dreams and goals but all kinds of personal and confidential information about your health, money and financial dynamics.

“Integrity, trust, authenticity and a genuine desire to help people are paramount in an adviser,” Polwrek adds. “Trust your instincts about whether you can relate to each other.”