Once, in the USA Weekend there was what may have been the shortest article I have ever seen on choosing the right financial advisor. This article is the perfect example of why I started the Finance Gourmet.
The article is by Sharon Epperson who is the author of a book called The Big Payoff which I haven’t come across yet. Every word is true and accurate. But can you use it to find a financial advisor?
Ms. Epperson offers three big steps to finding the right financial advisor. The first is to gather recommendations, for which she lists four places to look. The second big step is to dig deeper than websites and brochures. Then, she suggests asking about certifications, naming specifically the CFP and the ChFC designations. She points out that firms should be registered with the SEC (and then throws in the confusing and/or state securities regulator), and even suggests requesting the firms’s full Form ADV.
I’ll point out here that the Form ADV is one of the documents a firm is required to give you and have you sign it, so you can rest assured you will be getting one. The question is will you read it (see below)? Lastly, she says you should meet in person and interview more than one advisor.
Again, all good advice, and all true. But, when you go to try it, you are going to hit some snags. For example, is an advisor who is listed on both the CFP website and the FPA website a better advisor than one who is listed on just one? If the advisor is just on one which is better?
Here at the Finance Gourmet, I will try to give you that kind of information. For example, it might matter to you that the CFP website lists all CFPs for free. The FPA website has free listing too, but what about those bigger listings? Those cost extra. So, the guy at the top of the list with the nice logo listing isn’t better, he just was willing to pay for an ad.
Likewise, which is better a CFP or a ChFC? And then, if someone is a ChFC but not a CFP then they won’t be on the CFP website. Is that ok? What about CFAs? Are they O.K.?
Finally, I’ll also tell you that the Form ADV is a great way to get information on the firm you will be dealing with, but it is at least a twenty-page document which is filled with 80% to 90% boiler plate language. In other words reading the whole thing for each firm you are dealing with will be a big time waster. If you read Ms. Epperson’s article, you would confidentially ask for a Form ADV, only to get one and then never read it.
So, here is how to use the Finance Gourmet. Read these other articles in newspapers and magazines whenever you get a chance. They are good as a useful starting point. Then, come here to fill in the details. As you read this article notice the terms and buzzwords (CFP, ChFC, SEC, Form ADV, and so on.) Jot them down and get the details here. Then, read our in depth articles and postings.
The Finance Gourmet