Does Your Financial Advisor Make The Grade? What To Look For!

July 15, 2014

Have you hired a competent financial advisor? What makes one financial professional different from another?  What steps and/or attributes should one take/look for in conducting a search?  Those in need of advice need a process to evaluate an advisor prior to making a potentially critical mistake.   I'm a Certified Financial Planner.   I'd like you to take comfort in this very fact,  as the information you're about to read is based on my two decades of industry experience. What would I do if placed in your position? My hope is to provide you a basis to compare and contrast different financial advisors, and help you understand some of the key qualities that make one advisor different from another.

Fresh out of college with a BS degree in Finance from San Diego State University,  I lacked real world industry experience.  My first few years in the industry put me on an upward learning curve, a curve whereby learning was acquired  through trial and error.  Through experience, an advisor learns how to handle difficult situations (investor concerns/fears/ market corrections), and is thus better prepared to provide solutions in a calm, clear and concise manner.  Through experience, the  advisor may be able to recognize vulnerabilities quicker and respond with solutions in an expeditious manner.   Real world experience differs from the experience one encounters in a class-room setting an/or reads about in history books. To summarize, advisors learn from mistakes, and thus experience is a valued attribute.  

Consider the individual advisor.  Which attributes should you pay close attention to? Which attributes should you temporarily set aside? Try and ignore the polished sales pitch, the expensive suit , and the beautiful office equipped with flat screens tuned to CNBC (on mute).  Instead,  focus on the advisor's attributes that seem genuine and provide some factual clarity.  "Image casters"  exude success, and must be considered, for without them,  an undesirable impression  often remains.  Here's an example of how I was initially swayed into believing what an image (attribute) presented.  Being  new  to NYC  and its financial district,  my first impression on the way to work was how successful and powerful the men and women walking to and from work appeared.  Dressed in expensive suits and  embroidered shirts,  I believed I was amongst the rich and powerful. Within a short time, I too was among the well-dressed walking to and from work, and dressed for success. Had the new suit provided me with experience? No! Was I suddenly more equipped to make financial decisions?  No!  Had I overnight acquired new found knowledge - other than some key fashion brand names? No!  I had simply created an image of success and power for all to see.   Culture, media, and marketing provide a strong influence on perception and human behavior, yet they're  not necessarily strong predicators of future success, nor do they signal an advisor is competent  or experienced.  Look to the  individual advisor behind the smoke screen to determine competency and experience.  Inquire about industry experience,  reputation and competency?  Has an advisor been disciplined by a regulatory agency?  Don't be afraid to inquire about commissions and/or fee's, and/or discuss an advisors track record.

Should my search begin at  name brand brokerage firm,  regional bank, or with an  independent financial advisor/planner  This question is typically in the back of everyone's mind, yet from my perspective, the question makes little sense.  Here's why, brand names that at one time made us feel secure, often disappear with time.  Popular name brands can become  tarnished by scandals, disappear through merger/consolidation, or simply fail and disappear.   Recent trusted names such as Washington Mutual, Countrywide,  Lehman Brothers and Bear Stearns have all disappeared, replaced by new trusted brand names.  Each institution employed  smart  minds from all over the world, yet employed key decision makers who rendered the firms bankrupt or obsolete - as they no longer signified what they once stood for (trust).  Not all firms are caught up in scandal, yet merge or are taken over by larger firms.  Here's another example from my past.  While in New York, I was hired by Chemical Bank to work within the Investment Research department.  While employed at Chemical Bank, we were bought by Chase Bank.  Chase would later go on to merge with JP Morgan and today  is known as JP Morgan Chase.  My point is,  Don't get caught up in a name.  Great financial advisors can be found at all platform levels, such as the big wire house, bank and independent channels.   

Should you pay attention to all those fancy designation(s) after an advisors  name?  Are designations important?  Simply put, designations provide credence to a particular advisors knowledge base.  They show a commitment to advance one's own knowledge base.   It's important to note,  not all designations are created equal. Some designations require in depth study and research,  while others can be obtained with little effort.  Becoming a CFP® (Certified Financial Advisor™) requires the advisor to meet initial and ongoing education requirements, pass a rigorous 10 hour two-day exam, have a bachelors degree from an accredited college or University, and also adhere to the CFP Boards Code of Ethics .  Therefore, yes, designations are important, although not all designations are created equally.


Do your homework.  Conduct some basic research on the advisors you are contemplating working with.  Have they faced disciplinary proceedings, been fined, or experienced financial difficulty themselves.  To start, visit the FINRA "broker check" web page located here:

At the FINRA "broker check" web page, you're able to perform some basic research on a particular broker/advisor by name or firm. Further, you can review registration history  (the year licensed) disciplinary history (indication of problems), and qualifications (if any).  The CFP® Board releases a list of those planners authorized to use the CFP® mark who've declared bankruptcy?  "The CFP Board verifies the bankruptcy and notes the bankruptcy filing on the CFP® professional's public profile, located on the CFP Board's website." A statement with the disclosure says, "The release of the information does not constitute discipline of these individuals and is provided only for the purpose of providing consumers with adequate information to make an informed decision with regard to engaging a CFP professional to assist with financial decisions." To research a particular CFP® professional, go to: 

Is your financial professional ethical?  Does your advisor put your interests ahead of his/her own?  This may be difficult to determine, yet I find a simple "feeling" or "gut check" works best.  In all likelihood, it's going to be impossible to determine with certainty whether your advisor is committed to always do the right thing - putting your interests above his/her own.  The "feeing" you get regarding their ethics  is a powerful  and useful instinct for determining  ethics, use it!

Finally, I get this question quite frequently, and would be remiss if I failed to address it.  "What kind of return do you average for your clients?"  If this question were pertinent, the individual would simply go with the advisor who provides the highest return, right?  Wrong!  In my financial planning practice, everyone has a unique set of factors that ultimately determine one's overall rate of return.  The following factors help determine one's return: risk tolerance, return expectations, age, and objectives/goals.  The more risk you assume, the greater your expected return - after all, we all would like to be rewarded for the risk we take.  For example, your return expectations and tolerance toward risk may look extremely different had we formed a relationship at age 25 (saving for retirement) versus age 75 (in retirement).  A more accurate question might be "based on my risk tolerance, age and pre-determined set of goals, what type of overall return can I expect?"

In summary, look to find an experienced and competent financial advisor.  Try and avoid the common "image caster" attributes  that all advisors exude, and look behind the smoke screens for factual data.  The platform from which your advisor operates (fee based, commission based, wire house, bank or independent), need not play a significant role, as great advisors can be found under  each platform.  Your advisor should be experienced and free from regulatory discipline.  Use the tools I've provided to conduct research on your prospects, and utilize the 'gut feeling" to help determine if your financial advisor is ethical.


Written by Gregg F. Himfar CFP®

President of GFH Financial - Financial Planning & Wealth Accumulation Strategies

Should you have any questions or concerns about the material presented, feel free to contact the author, Gregg F. Himfar CFP® at 760-448-6440