In this age of information at our fingertips, there’s no shortage of resources about investing or managing our personal finances online. But not everyone has the time or inclination to do it themselves, and the complexity of many situations warrants professional help.
If you are a Vista client, you already recognize the value of professional advice. But many people – whether it’s an adult child, a friend, or colleague – may be wondering: when should I hire a financial advisor and what’s the best way to find one?
When to hire a financial advisor
In most cases, a major life transition will trigger the decision to search for and hire a financial advisor. These transitions usually entail financial decisions with many potential outcomes, creating complexity and uncertainty. For example:
- Employment transitions: complex compensation planning, 401K rollovers, concentrated stock positions
- Family finances: managing debt, emergency savings, buying a home, saving for college, marriage, divorce, or death of a loved one
- Financial windfall: minimizing taxes and investing the proceeds from inheritance, business sale, legal settlement, etc.
- Retirement readiness: determining when to retire, portfolio withdrawals, and scenario planning
The acronym soup of credentials
Shopping for a “financial advisor” can be challenging. Unlike the standardized requirements of lawyers, accountants, and doctors, there is no uniform educational requirement for someone to call themself a financial advisor. And yet, advisors hold the weighty responsibility of safeguarding and growing clients’ hard-earned savings while also offering critical financial planning advice.
While there are many professional credentials out there, we believe two rise above the rest:
The CERTIFIED FINANCIAL PLANNERTM (or CFP®) designation is for professionals who have completed a rigorous certification process, demonstrating expertise in areas like financial planning, taxes, insurance, estate planning, and retirement planning. Vista is proud to have fourteen CFP® professionals on staff.
Individuals who’ve earned the Chartered Financial Analyst (CFA) charter are experts in investment analysis and portfolio management. They have amassed at least four years of qualified work experience and have passed three successive exams, covering topics like statistics, economics, portfolio management, and ethics. Three members of Vista’s team hold this prestigious designation.
Credentials aside, perhaps the most important aspect of a financial advisor is their fiduciary capacity. Fiduciaries, like your advisors at Vista, are legally and ethically required to place their clients’ interest before their own. This means recommending strategies and using products expected to benefit the client, regardless of how their use affects the financial advisor.
How do advisors get paid?
The three most common business models for financial advisors are fee-only planners, commission-based planners, and fee-based planners.
Fee-only: Fee-only advisors are compensated solely through fees paid by their clients. These fees can be based on the time an advisor spends with the client, a fixed fee for a specific service, or as a percentage of total assets managed for the client.
Commission-based: Some financial advisors earn their income through commissions on financial products they sell, such as mutual funds, insurance policies, or annuities. They receive a percentage of the total amount invested by their clients in these products. This payment structure may create conflicts of interest, as advisors might recommend products that provide higher commissions, rather than those that are truly in the client’s best interest. Vista accepts no commissions.
Fee-based: Fee-based means compensation can come directly from client fees and commissions. This can create conflicts of interest and confusion as to whether the advisor is acting in a fiduciary capacity or as a commissioned salesperson.
Find the right fit
Ultimately, finding the right financial advisor is about trust, competence, and service fit.
If someone you know is searching for an advisor, share this post with them as resource. Or introduce them to your Lead Advisor at Vista—we’ll make sure they get the advice they need, whether that’s with us or another advisor.
While we have a $3M minimum and are not equipped to help everybody, we are fiduciaries and want to help the people you care about.