You may feel good about hiring a financial adviser, especially if a friend gives a rave review. But the fact that you’re going to lean on this adviser to manage your life savings may still leave you a little queasy.
They may also work closely with certain financial services companies and pitch those products at the expense of a competing company’s offerings. Or they may favor a particular type of product for valid reasons but not disclose incentives that affect their advice. “If everyone seems new, you may wonder why are there so many new hires,” Hopkins said. “Longevity [at the firm] and low turnover are good signs. There’s a lot of delegation involved [in financial planning] so you have to trust” the inside team of employees as well as key outsiders such as accountants and attorneys who work closely with that adviser.
As a test, call and ask a technical or detail-oriented question. If the adviser sends a response with a crisp summary of facts, figures and to-do items as covered in the phone conversation, that’s a good sign. “If you like your adviser but you’ve heard bad things about the other four advisers at the firm, that can be a red flag,” said Timi Joy Jorgensen, director of financial education and wellbeing at the American College of Financial Services in King of Prussia, Pa.
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