Looking for a Financial Advisor? Follow these 3 Rules


Question:  I need help managing my investments.  I thought it would be easy, but I have found I don’t have the time, inclination or knowledge to do the job well.  When I search on the Internet, I see listings for brokerage firms, insurance companies, financial planners, financial counselors, wealth managers, and investment advisors.  How do I choose one?  

Answer:  Your best approach is to use the same method you would use to find a doctor, a lawyer, an accountant, a dentist, or any other professional.  Follow the rule of the “3R’s” -- Referral, Research, and Rapport.   Let’s look at each.


Start your search by asking friends, acquaintances, and other professionals, such as your lawyer or accountant, for recommendations.  Lawyers and accountants already share clients with local financial advisors and they may be familiar with the financial advisor’s professional reputation, ethics, and method of operation.  If the lawyer or accountant is being paid to give referrals, they should tell you so. 

Friends and acquaintances may be using a financial advisor they are pleased with.  Referrals are much better than the internet as a starting point.


Once you have a few referrals, do some research.  Start by analyzing your own needs.  Do you need a financial or retirement plan? Do you want someone to “take over” your investment portfolio, or would you prefer to find an advisor to validate your own decisions?

Go to http://www.sec.gov/investor/brokers.htm , read the SEC’s advice, and use their advisor search feature to check for disciplinary problems.  If the advisor or his firm isn’t listed or has been in trouble, stay away. 

Once you know what kind of help you want then meet with two or three advisors on your list. Ask them:

  1. What is your educational background?  Formal education, at least through the four-year college level, can indicate that this advisor has a well-rounded general education and has shown the commitment to make it through college. A degree with an emphasis in Finance and Economics is a plus.

  2. What experience do you have?  With experience comes wisdom--the single, most important attribute of a skilled advisor.  You may find an advisor with the highest IQ in the state and a Ph.D. in Finance, but with little experience.  Wisdom combines knowledge with experience. 

  3. What registrations and licenses do you hold?  Are you registered with the Securities and Exchange Commission and/or FINRA?  Are you a certified financial planner professional with a current CFP® designation?  If the advisor is a registered investment advisor, ask for a copy of his Form ADV (a required document that discloses the advisor's fees and any conflicts of interest). 

  4. What services do you provide and what areas do you specialize in?

  5. What minimum net worth do you require and what kind of clients do you usually work with (retirees, professionals, etc.)?

  6. How are you paid? Do you charge fees?  Do you receive commissions?

  7. Will you work with me under a fiduciary standard and promise to place my best interests ahead of your own?


The Merriam-Webster dictionary defines rapport as a relation marked by harmony, conformity, accord, or affinity.  You want to have good rapport with your advisor and feel comfortable with his or her advice.  Trust is an essential aspect in a client/advisor relationship.

Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment manager and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to ken@montereypw.com