Finding the right wealth manager starts with research. Asking family, friends and business associates for recommendations is a great place to start. A firm with a good reputation that has “roots” in the community is always worth looking into. Search the websites of the National Association of Personal Financial Advisors (NAPFA), Financial Planning Association (FPA) and the Certified Financial Planner (CFP) Board of Standards for members in your area.
Look up prospects online to get a sense of what each firm is like. Something as simple as the photos on their websites can form an impression of what they’d be like to work with or what demographic they’re targeting. Finally, set up your initial meeting. Most planners do not charge for this, and it’s an opportunity to learn about their services and determine the possibility of your working together.
Be aware of red flags when evaluating wealth managers. Guarantees and promises such as to double your money or anything of this sort is a neon sign that you are not dealing with a reputable wealth manager. Instead, look for a company that can offer you:
• a comprehensive assessment of your current financial situation through the review of documents, such as your last two tax returns, wills, insurance policies and estate and retirement planning documents, liquid and illiquid assets, and all income sources;
• a clear perspective and identification of your financial needs and goals;
• the development of a financial plan;
• the pros and cons of various options and financial instruments (stocks, bonds, mutual funds, IRAs, etc.);
• coordination with other professionals (investment brokers, lawyers, accountants) to execute your plan; and
• a periodical review of your progress to make sure your financial plan and goals have not changed due to life events.
Review the services provided and go with someone who suits your needs.
Do they charge a percentage for assets under management, or do they make commission from selling you a specific product? Simply put, some wealth managers make a commission on the financial products they sell you — insurance policies, mutual funds, etc — and charge a set amount, which may either be an hourly fee, a flat fee for a comprehensive plan, or an annual retainer. Neither is necessarily better than the other, but you should know how your wealth manager is being compensated. Also, although the initial meeting is usually free, it’s always better to ask to confirm.