How an Advisor Chooses an Advisor

June 20, 2016

Earlier this week a coworker sent me a satirical piece on 401(k) management in the U.S. prompting a conversation about what we felt made a good advisor.  Roughly a month back we had both attended a conference geared towards best practices for advisors where we had the chance to observe what other firms were doing well in the industry.  In light of both the piece and the conference, we found ourselves identifying certain characteristics of a financial advisor that we would look for if we were personally in the market for one.  The following list is a byproduct of that conversation:

  • We would want a fiduciary.

Different types of investment professionals are held to different standards by government regulatory agencies based on what type of professional they are.  For us, one of the most important things to look for, if not the most important, is an advisor who is held to a fiduciary standard.  A fiduciary, by definition, is someone legally obligated to put your best interests first.  This is in contrast to someone with a suitability standard who is merely required to provide you with something that is “suitable” or “good enough” but not necessarily the very best option.  In my mind, this standard is crucial because when it comes to your money and financial goals you want someone who is looking out for your very best interests, not simply offering what is appropriate.

  • We would want an advisor with good credentials.

One of the things my coworker and I found ourselves in strong agreement on was the need to find an advisor with credentials above and beyond the base regulatory requirements leveled by relevant government agencies.  In our opinion, the licensing requirements for becoming an advisor aren’t very difficult to satisfy.  Of course, passing a difficult test doesn’t necessarily mean someone is good at their job, but for us, we would want someone who could prove they knew their stuff.  That’s why we would look for an advisor who had been able to show they were an expert in their field by obtaining well-known, well-respected credentials such as a CFP (certified financial planner), CPA (certified public accountant), or CFA (chartered financial analyst).

  • We would want an advisor who values continuing education.

In addition to wanting someone who had taken the time to become an expert in their field by pursuing accreditation with a credible governing body, we would also want someone who valued staying an expert in their field by continuing to educate themselves.  Because the laws regarding taxes and financial planning are constantly changing (just this year Congress changed some of the rules regarding social security) we believe that a good advisor is someone committed to constantly learning and seeking to stay relevant for the sake of their clients.

  • We would want an advisor who offers competitive fees.

I would lump searching for an advisor in with other big financial decisions like upgrading the windows to your house or installing a home theater.  You don’t want to overpay, but you also don’t want to underpay and end up with something cheap that doesn’t do the job.  Fees detract from performance, but paying too little could mean that your advisor isn’t doing anything either, which could also hurt performance.  In my mind, fees are an area where it’s worth it to do your research and see what the going rate is.  Usually, firms set their fees to be competitive with other firms in the area, which is one way that you can get a good grasp on what you should expect to pay for someone who knows what they’re doing.

  • We would want an advisor who was honest and transparent.

My husband and I recently closed on a house and during the process, our loan officer was incredibly open and honest about each and every detail of the transaction. His transparency and commitment to answering our questions made the experience so much easier than I had anticipated.  In a world filled with fraud and scandal, I believe that honesty and a feeling of safety is a very valuable characteristic of any financial professional including an advisor and one that I would place in very high regard when it comes to choosing an advisor.


Here at Cedarstone, we strive to be a company that we would want to be clients of.  From the very beginning, we have sought to offer services and standards that we could be proud of both professionally and personally.  If you’d like to learn more about how we strive for excellence in putting our clients first, I invite you to poke around our website or give us a call.  We’re always happy to share why we do what we do.

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