How to Choose a Financial Advisor
If you’ve decided to work with a Christian financial advisor, congratulations, that is a decision that can have many positive benefits. Your next question might be: How do you choose the right financial advisor to work with? Here are a few things to consider.
Type of service
Are you looking for comprehensive financial planning or investment management? Do you need specific advice like saving for a child’s education? Knowing what type of service or advice you need is the first step to choosing a financial advisor. You should find an advisor who is best suited to meeting your needs. If you’re not sure what your financial goals are then working with a comprehensive financial planner can help identify your goals and develop a plan to achieve them. When you talk with a prospective advisor, be sure to ask them what services they offer to get an idea if they can provide what you need.
How do you want to pay for advice or services? Does it make a difference? Fee structures are still a confusing area for many consumers. To simplify, let’s look at the three main ways advisors are paid:
- Commission – Many advisors are paid a commission for any transactions they make on your behalf. For example, if you invest in a mutual fund with this type of advisor they will earn a commission on the sale. Advisors operating under this fee structure must offer products that are suitable to your goals and any financial advice they offer is incidental to the transaction.
- Commission and fee (sometimes called hybrid or fee-based) – These are advisors who may charge a fee for investment advice, either as a flat fee or a percentage of assets and may also charge a commission on certain investments they sell. When selling investment products, they operate under the “suitability standard” but when offering advice, they must operate under a fiduciary standard, meaning they must work in your best interest.
- Fee-only – Fee-only advisors are registered as Investment Advisors. They are paid set fees, either established rates or a percentage of assets, for providing financial advice. They do not receive commissions for any transactions. Fee-only financial advisors are fiduciaries meaning they must work only in your best interest.
Which fee structure is best? That depends on what type of service you need. Beacon Wealth Consultants is organized as a fee-only company because we believe that is the best way to serve our clients. When you talk with a prospective advisor, be sure to ask them how they are paid.
Education and experience
Do you want a qualified professional helping with your finances? I bet you do! When you are choosing a financial advisor to work with you will want to make sure they have the education and experience needed to help you. Good financial advisors seek the education needed to best serve their clients. This education can be gained through conferences and training, independent study or pursuing higher-level qualifications like the CERTIFIED FINANCIAL PLANNER™ (CFP®) or other designation. You also want an advisor who has experience working with people like you and advising on situations like yours.
There are many ways an advisor can grow their knowledge and experience to be able to help you with the advice and service you need. When you talk to a prospective advisor, ask them what designations they have or how they continue to learn? Ask them how much experience they have as an advisor and what types of clients they typically work with.
How do you feel when you’re talking to a person who uses a lot of technical terms or concepts you don’t understand? Nobody likes making a decision when they are confused or don’t understand the details. A good advisor is also an effective communicator. They should seek to educate you about your financial life and communicate in a way that helps you understand and gain confidence. When you talk to a prospective advisor, ask them for examples of how they have helped educate clients in the past.
Do you want to work with someone who shares your deepest values? The relationship between advisor and client can be a deep one. Advisors often help clients navigate important milestones like retirement or challenging times like the death of a spouse. Having an advisor who shares your values can make this relationship even more meaningful and ensure that you and you advisor are on the same page. One organization, Kingdom Advisors, offers the Certified Kingdom Advisor (CKA®) training and designation. CKA®’s have significant training in biblical stewardship and it is the most comprehensive training for Christian advisors who want to integrate their faith with financial planning. When you talk with a prospective Christian advisor, ask them how they integrate their faith with their role as an advisor. Ask if they hold the CKA® designation.
Are your investments aligned with your values or do they undermine them? Many Christians are unknowingly profiting from abortion, pornography, and other negative business activities. Unfortunately, many Christian financial advisors are also investing their client’s money in these activities. Christian financial advisors specifically specializing in faith-based investing have the tools and research processes to avoid these negative activities and look for companies seeking to bless the world. Advisors can also leverage the expertise of Christian portfolio managers who specialize in faith-based investing. When you talk to a prospective advisor ask them if they screen investments for biblically responsible funds. If they do, ask them their process or the tools they use to screen their funds or if they outsource this function.
Choosing to work with a Christian financial advisor is an important decision. Taking time to identify your goals and the type of advisor you’d like to work with can set you up for success in this new relationship.
Beacon Wealth Consultants offers fee-only fiduciary planning and investment management provided by a team of qualified and experienced Christian advisors. We approach financial planning from a Christian perspective and help our clients align their financial lives with their faith values. We use a rigorous process to ensure that our clients do not sacrifice performance while pursuing faith-based investing. Please contact us if you would like to begin a conversation about your goals and how we can help you achieve them.