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How to Select a Financial Advisor

Along with a new year comes a chance to reevaluate your financial goals. And if you need assistance charting the right course to reach those goals, a financial advisor can help.

Choosing a trusted financial advisor is like hiring someone to work for you – it’s best to get a sense of who they are and what they can bring to the table beforehand. Are you ready to interview a potential advisor? Here are some points to consider:

Fiduciary Responsibility.

Fiduciaries must always put your financial interests first. Non-fiduciary financial advisors are held to a lower standard of making “suitable” recommendations. Suitable is not the same as “in your client’s best interest.”

Ask: Are you a fiduciary?

Services Offered.

Different advisors offer different services, which may include: financial & retirement

planning, portfolio management, investment planning, trust & estate planning/administration, retirement plan services, non-profit & charitable asset management, and donor advised gift funds.

Ask: What services do you offer? Are the services you offer all inclusive?

Compensation.

There are three main types of compensation in the financial advisor world; fee-only, fee-based, and commission.

Fee-only: This could be a flat fee, hourly rate, or a percentage of assets under management. Fee-only means they do not receive commissions or other payments from the sale of financial products they recommend to clients.

Fee-based: Also known as “fee and commission” compensation. Unlike fee-only advisors, fee-based advisors may also earn money through commissions or brokerage fees. These fees can present potential conflicts of interest. The advisor may have a financial incentive to sell you the products from which they can earn a commission, even if it isn’t necessarily the best product for you.

Commission: An advisor who works on commission receives payments from companies for selling their products to clients. If you feel that a financial advisor is trying to sell you something, it is likely that they are paid on commission.

Ask: How are you compensated? What is your fee structure?

Expertise.

Seek a financial advising firm with an experienced team and reputable credentials. Some of the most sought after certifications in the financial industry are: Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA®), Certified Public Accountant (CPA), and Juris Doctor (JD- lawyer).

Ask: Do you hold any professional designations? Does your firm have a team of experienced people with different education and expertise?

As a local community bank offering Trust and Wealth Management services, Hills Bank has served the financial planning needs of Iowans for decades. Want to give us an interview? Feel free to reach out to any of our Trust or Wealth Management Officers at 319-338-1522, or visit us online at hillsbank.com/wealth-management.

Investment products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.

Hills Bank Member FDIC - https://www.hillsbank.com/