I have trained and coached financial advisors for many years. I have worked with some of the best and a few of the worst along the way. Some of the stories I can tell may not rival The Wolf of Wall Street yet they would definitely raise a few eyebrows. I have made my share of hiring mistakes in search of the best financial advisors.

So I believe I have the insight to help you avoid the pitfalls when it comes to finding a financial advisor you can trust. Here are my top 5 characteristics you should look for when you go searching for a financial advisor.

1. Patience – You will have a lot of questions and you deserve answers that make sense to you. A good advisor understands this and will take the time to explain (minus the jargon) what you need to know. It’s not unlike going to a doctor. The good ones will sit knee to knee with you and answer your questions instead of making you feel like it’s the NFL draft and you are “on the clock” so hurry up.
2. Sincerity – Yes, you represent potential income to any financial advisor but the best ones will put your interests first. We’ll get to commissions in a minute. Here I’m referring to the sincere interest in helping you solve your financial problems. I remember getting my tonsils out when I was 14. I was awake in the doctor’s chair. He had tools hanging out of my mouth with a clamp on my tongue. I can still remember the big smile he had on his face as he snipped out my tonsils. At one point he said to me, “I just love doing this.” I didn’t mention that he was about 70 years old at the time. That’s what you want. Someone who smiles and acts like they really love what they do.
3. Competence – You are interviewing the advisor as much as they are interviewing you. When all is said and done your “gut” will tell you whether or not it’s a good fit. Having a CFP certificate on eh wall is assuring. 20 years in the business is great too as long as they aren’t 20 one-year experiences. Obviously a successful track record is important but a newer advisor that you feel a connection with can do just as good of a job if not better than someone with all of the credentials but you don’t have a good feeling about. Trust your instincts.
4. Fee Simple – Sounds like a real estate term doesn’t it (it is but it fits here too). What I mean is, can you understand how the advisor gets paid and does it make sense to you. You will talk to people who say, “Oh, only work with a fee-based advisor”. As if that is a guarantee of honestly and fair dealing. Yes, fee-based puts you and the advisor on the same side of the table. The advisor’s fee goes up when your portfolio goes up and goes down if your portfolio goes down. Yet, there are times when a commission-based product may be the right fit for your specific needs.                                                                                                                                                                                                                                          A commission reflects the value of the advisor and the product solution that is being used. It doesn’t automatically represent greed and not having your best interest at heart. A good advisor will explain why a particular solution is being recommended and…you can and should ask about how the advisor gets paid. Full disclosure should be the name of the game in this type of business relationship, especially when it’s your hard-earned money at stake.
5. A good listener – I subscribe to the motto coined by Stephen Covey, author of Seven Habits of Highly Effective People – Seek first to understand. When I train new salespeople I explain that during the meet and greet step the ratio of listening to talking should be 80/20 i.e. you should be listening 80% of the time and talking 20%. How else can I get to know you and your financial issues? If it’s the other way around that should be a “red flag”. Beware the advisor who talks to impress you and/or recommends a solution before understanding your needs.

There you have it, my top 5 things to look for in a financial advisor. Are there more than 5? Sure. You will know what is most important to you when it comes time to shop for an advisor. Think of it as a doctor’s visit. You want the best care wrapped up in a person you feel comfortable confiding in and, in this case, who has your financial versus your physical well-being at the forefront. Plan well. Live better!

Time out! What is the most important characteristic you want in a financial advisor? You can leave a comment here.