Finding Quality Advice

Once you know you are paying a fair price, you can turn your attention to the quality of the advice. You want your advice to come from an experienced fiduciary, fee-only adviser with a commitment to the profession. You want many of their clients to be dealing with the same financial issues you have: If you owe $300,000 in student loans, ask how many of their clients owe $300,000? If you earn $400,000 a year, how many of their clients have similar incomes? If you are a self-employed physician, how many of their clients are self-employed?

You also want your adviser to avoid methods of investment that have been shown in the academic literature to be less effective. These include stock picking, market timing, the use of actively managed mutual funds, and extreme combinations of investments. It is a good sign if your adviser is talking about keeping costs low, using index funds, and being prepared for any possible future outcome because no one can predict the future.

It can be worthwhile to seek out recommendations for advisers. However, rather than turning to colleagues who use an adviser, I would recommend you reach out to financially knowledgeable colleagues who do not use an adviser, as they are more capable of recognizing when an advisor is offering good advice at a fair price. Reputable websites may also provide lists of recommended advisers, but remember to do your own due diligence as well. You should read the required Securities and Exchange Commission disclosure document, titled “ADV2,” which can be found at www.adviserinfo.sec.gov/IAPD. Sections five, eight, and nine are particularly important. You should read the adviser’s website. You may even consider paying to have a background check done. But at a minimum, do an internet search of the adviser’s name and the firm name combined with terms like “scam,” “arrest,” and “review.” Online reviews may be worth looking at, but remember that they are no more accurate for advisers than they are for doctors and are often just as unfair.

If you need financial advice and assistance, do not avoid hiring the help you need just because it costs money and requires a bit of effort. The price is likely well worth paying, and the due diligence can be done quickly and easily. Just ensure you get good advice at a fair price to speed you along your way to financial stability.