Financial Planning Focus – Take a Walk in Your Advisor’s Shoes: Ten Steps for Evaluating a Prospective Financial Advisor

August 01, 2016
By Matt Cohen, CIMA®

The Washington Post recently ran an article written by Bruce Horovitz discussing ten important steps to take before hiring a financial advisor. We’ve listed the ten steps mentioned in the Washington Post article below, with commentary on how West Financial employs these practices. Our desire is for anyone considering professional financial advice to use these steps as a starting point in your selection process. If you are a current West Financial client and have friends, family or colleagues considering a professional advisor, we encourage you to send these best practices to assist in their decision making.

  • Ask friends – being in business for over thirty years, we have met with and helped hundreds of individuals and families in the Washington DC area and beyond. We encourage you to ask your network about us, and we are happy to provide references to assist you in your decision making.
  • Interview several advisors – As much as we want to help you with your financial needs and goals, your comfort level with a financial advisor is an important indicator of how happy you’ll be with the relationship. With our  commitment to personalized service and fiduciary practices, we feel confident that our holistic approach will set us apart from our competitors.
  • Request credentials – A certified financial planner practitioner (CFP®) has demonstrated a deep understanding of the capital markets as well as a wide range of topics such as estate and retirement planning. West Financial has eight certified financial planner practitioners on staff, as well as professionals with CPA, CFA®, CEBS® and CIMA® designations.
  • Ask how you will pay – West Financial is a NAPFA registered financial advisor, which means our compensation is solely fee-only, with no compensation coming from product sales or commissions. Our financial planning services are billed at an hourly rate and compensation for our asset management services is a percentage fee based on the value of assets managed.
  • Meet in person – All prospective clients are encouraged to meet with us in person. We find that talking through your needs, wants and goals results in a better experience for you and helps us tailor our advice.
  • Ask tough questions – We are confident in our financial planning process and investment philosophy, and look forward to discussing our approach with you. No question is out of bounds.
  • Make your goals clear – When preparing a comprehensive financial plan for clients, we gather an extensive amount of data, including asking about short and long term goals. Our investment management services offer customized portfolio solutions to fit the unique needs of each client. We spend a lot of time up front learning and understanding your goals, needs, and desires.
  • Agree on how to measure results – As discretionary managers, we make investment decisions within the framework of the investment guidelines established with each client. We compare portfolio results against recognizable benchmarks and include the results in each and every quarterly report we send out. However, we do not just rely on benchmarking. For clients nearing or at retirement, we will periodically evaluate the rate of spending in the portfolios to ensure it remains at a sustainable level, and alert our clients when it is not. For those who also go through our financial planning process, we are able to benchmark cash flow and net worth on a year-by-year basis, or as necessary to determine how clients are progressing toward their goals.
  • Request regular communication – We love meeting with our clients, and encourage periodic visits. In addition, we are available throughout the day to discuss whatever top of mind concern or question a client may have. We are proud of the service level that we provide.

The last guideline we’ll leave verbatim from the article. Complaints and violations made against financial advisory firms and their representatives are public. West Financial is regulated by the SEC and we would encourage you to review our filings on their website.

  • Check them out Double-check with the U.S. Securities and Exchange Commission (sec.gov) or with the Certified Financial Planner Board’s website (cfp.net) to see whether your potential adviser is registered or certified. The Financial Industry Regulatory Authority’s website (finra.org) lists complaints against brokers. Request from a potential adviser the names of several current clients who can provide recommendations.