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Financial Planning

How to Pick a Financial Adviser

We tell you all you need to know to find the perfect match.

My husband and I recently took advantage of a free consultation with a personal financial adviser at Vanguard, where we hold a big chunk of our investment accounts. After filling out a detailed financial profile—listing such things as assets (both in and out of Vanguard), liabilities, projected retirement dates, and income from pensions and Social Security—we scheduled a conference call with a certified financial planner. The call lasted for about 45 minutes, during which the three of us discussed elements of our profile and our financial goals.

 

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Afterward, we received a detailed, 36-page investment plan, in which Vanguard’s computerized program recommended how we should invest our assets to achieve an optimum mix of 50% stocks and 50% bonds (the moderate allocation we had requested). The plan involved selling a number of our current investments (including Vanguard funds we already own) and reinvesting the money in a diversified mix of other Vanguard investments (mostly index funds). If we wanted Vanguard to do the work for us, we could sign up for a managed account and pay an annual fee of 0.3%.

It took me a while to digest all 36 pages, and I still have some follow-up questions. But I think I’ll hold off taking the next step. I’m not unhappy with my current investments (which include non-Vanguard funds and individual stocks), so I’m not in the market for a managed account right now. But that could change. And the experience has been worthwhile because we were reassured that we are on the right track.

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Where to start. It’s often a need for re­assurance (or, at the other extreme, panic) that prompts people to seek professional help with their finances at critical points in their lives—when they’re ready to retire, for example, or they get married or divorced, start a business, or inherit a windfall. Which leads to the big question: Where can you get the best financial advice? Kiplinger’s can’t recommend a personal adviser for each of you. But in this issue, we tell you all you need to know to find the perfect match on your own.

Contributing editors Lisa Gerstner and Kim Lankford answer key questions about when you should hire an adviser, how much you should expect to pay, what questions to ask and how to protect yourself. If it’s help with your investments that you seek, see our story on the best online brokers. Associate editor Daren Fonda rates seven of the biggest brokers based on their investment advice and six other criteria, including commissions and fees, investment choices, and ease of use.

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After doing their research, our three staff members offer some advice of their own to keep in mind during your search. From Lisa: “Just as you would with a therapist or physician, find someone with whom you’re comfortable sharing all the details—even the embarrassing ones.” From Daren: “Look at the whole package when selecting a broker. Low fees may not be worth the savings if the website is a hassle and you can’t get decent customer service.” From Kim: “Do some due diligence before talking with an adviser. It’s easy to look up an adviser in the SEC or Finra databases to see if there are any skeletons in the closet.”

Based on my own experience, I’d recommend taking advantage of any free or low-cost services offered through your employer, an investment company, individual planner or online tool. You’ll at least get a snapshot of where you stand and what you need to do. You can take it from there.

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