Broker Check

5 Things to Consider When Choosing a Financial Advisor

October 03, 2018

Yerba Buena Financial Partners (YBFP) understands the very human phenomena of “money” trepidation. Money is personal and talking about it is uncomfortable. It is no wonder people are overwhelmed when choosing a professional financial adviser.

By Andrew Zittell

1. The two E’s: Education and Experience

Education is important but does not overlook experience. An advisor’s educational background and especially experience creates a likely indication of their unique ability to help with your financial situation. Experience demonstrates their ability to apply their knowledge in developing an optimal financial strategy just for you.

Detailed information on registered independent advisors is available at Broker Check, a free tool provided by FINRA.

2. What do all the initials mean? – Certifications

Check out the certifications that an advisor holds. Designations demonstrate the continuing education that increases their financial knowledge base. To earn designations, advisors take extensive, specialized coursework, pass exams, and accrue relevant experience. Hours of continuing education must be completed to maintain these designations.

3. Fees or Transactional Compensation

Understanding an advisor’s compensation and potential incentives might uncover possible conflicts of interest.  Advisors commonly use one or more of the following pricing models:

  • Transactional Advisor: A commission or Broker fee is paid for each trades or transactions on your accounts.
  • Fee-Only Advisor: Financial services, including; financial planning and investment management for a fee-only arrangement, either an hourly flat fee or a negotiated rate for services rendered.
  • Fee-Based Advisor: Planning and asset management services provided at an agreed upon negotiated price.

It is important to understand and consider all fees associated with the recommended investments; know the all-in costs associated with your proposed financial strategy.

4. Fiduciary Level of Care

Fiduciary means in the best interest of the clients, always, above all else. While this is true in certain aspects of client relationships, it still will not be universal, so buyer beware. An advisor who acts as a fiduciary provides the highest level of care in all aspects of the client relationship, always, and on all accounts.

5. Working Relationship

Understand how often and with whom you will be interacting. Whether you want an initial meeting, followed by an annual review or ongoing support in plan implementation and coordination of service providers, such as insurance agents, mortgage brokers, accountants, and attorneys. Choose an advisor that presents your financial plan in a way you can understand and who then serves as the coordinator of all the other service professionals.

YBFP Mission Statement: Our greatest satisfaction comes in working with and guiding clients toward their financial freedom.