Guide to Hiring an Advice-Only Financial Advisor

Goal of this Guide: To provide you with concrete resources you can use as you find, interview, and hire a financial advisor. Specifically in a world where most advisors charge an AUM or assets under management fee, this guide is for those searching for an advice only, flat fee, or hourly financial advisor.

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Topics and Resources in this Guide

1. What to look for when searching for a financial advisor
2. Flat Fee Advisor Interview Questions
3. Financial Advisor Credentials

1. What to look for when searching for a financial advisor

When it comes to managing your finances, selecting the right financial advisor can make a significant difference. It’s a decision that requires careful consideration and understanding of various key factors that determine the suitability of a financial advisor for your specific needs. To assist you in this crucial choice, we have compiled a list of the top five criteria to consider. This list aims to guide you in evaluating potential advisors based on their qualifications, approach to financial planning, and how they align with your financial goals. By considering these aspects, you can make a more informed and confident decision in choosing a financial advisor who is right for you.

1. Credentials and Experience: Look for a financial advisor with reputable credentials such as a CFP (Certified Financial Planner) or a CFA (Chartered Financial Analyst). Experience in the field is also crucial. This ensures that the advisor has the necessary education and expertise to manage your finances effectively.

2. Fiduciary Duty: It’s important that the financial advisor has a fiduciary duty to their clients. This means they are legally obligated to act in your best interest, not just sell products or services that benefit them.

3. Fee Structure: Understand how the advisor is compensated. Some advisors work on a fee-only basis, while others may earn commissions on the products they sell you. A fee-only advisor can reduce conflicts of interest. AUM advisors charge you a percentage of the assets they manage for you, typically 1%. Flat fee or hourly advisors do not charge commissions and do not take a AUM fee. Instead they provide financial advice and build financial plans while you maintain control of your accounts.

4. Investment Philosophy: Make sure the advisor’s investment philosophy aligns with your risk tolerance and financial goals. Whether it’s aggressive growth or conservative income generation, their approach should match your preferences and most importantly, you should understand what investments you are invested in.

5. Communication and Accessibility: Assess the advisor’s willingness and ability to communicate effectively. It’s important that they are accessible and responsive to your queries. Understand their communication style and frequency, and ensure it aligns with your preferences. This factor is crucial for maintaining a transparent and productive relationship.

2. Advisor Interview Questions

Choosing the right financial advisor is a crucial decision that can significantly impact your financial well-being. To ensure you find a professional who aligns with your financial goals, values, and needs, it’s important to ask the right questions during your initial meetings. The following questions are designed to give you a comprehensive understanding of the advisor’s qualifications, approach to financial planning, and how they align with your personal financial objectives. By asking these questions, you’ll be better equipped to make an informed decision about whether this advisor is the right fit for you.

1. Can you tell me about your qualifications and experience in financial planning?
2. Are you a fiduciary, and how does that affect your financial advice?
3. How do you charge for your services, and could you provide a detailed fee structure?
4. What services do you offer, and what is your area of expertise?
5. Can you describe your typical client?
6. Can you provide examples of how you’ve helped clients like me achieve their financial goals?
7. How often will we communicate, and what is your preferred method of communication?
8. What is your investment philosophy?

3. Financial Advisor Credentials

In the complex world of financial planning and investment management, understanding the various credentials that financial advisors may hold is crucial. These credentials not only signify a professional’s expertise and specialization but also give insight into their approach to financial management and client service. Below is a list of some of the most recognized and relevant credentials in the financial advisory industry, each with a description and a comparison to help you discern the differences. Whether you’re seeking comprehensive financial planning, specific investment advice, or expertise in areas like retirement or tax planning, this guide will help you understand the qualifications to look for in a financial advisor.

• CFP® (Certified Financial Planner):

This certification is one of the most respected in the field of financial planning. CFP® professionals must pass an exam that covers a wide range of financial planning topics, complete several years of experience, and adhere to a code of ethics. It is considered more comprehensive in financial planning than some specialized designations.

• CFA (Chartered Financial Analyst):

CFA credential holders are recognized for their expertise in investment management and analysis. The CFA Program includes three levels of exams and requires several years of work experience. It is the most difficult of the financial credentials. The CFA curriculum is more focused on investment analysis and portfolio management than CFP®.

• ChFC (Chartered Financial Consultant):

ChFC professionals undergo training in financial planning, insurance, retirement planning, and estate planning. It’s similar to the CFP® but does not require passing a comprehensive board exam.

• PFS (Personal Financial Specialist):

While CPAs are known for their expertise in accounting, those who also offer financial planning services are well-versed in tax planning and management. This designation is for CPAs who also have knowledge in personal financial planning.

Meet Scholar Advising

Scholar Advising is a fee-only investment advisory firm focused on providing individuals with virtual fiduciary financial planning services on a project (hourly) or monthly retainer basis.

Financial advising requires a lot of trust from both client and advisor. We truly believe that each individual’s financial situation is unique and that a successful financial plan requires more than some calculations. This is why we emphasize the importance of building a strong advisor/client relationship and work hard to create and work toward financial goals as a team.

The fiduciary nature of our advice is very important to our core goals managing this financial planning firm. All advice you receive from Scholar Financial Advising is in your best interest and you’ll never have to question where competing incentives lie.

All of our advisors hold at minimum a Ph.D. degree in finance and in through their academic background have decades of experience researching and teaching a wide range of financial topics. The ability to breakdown advanced financial topics is a trait that we value in our advisors and is a skillset that lends itself nicely to building plans for our clients will execute.

Dr. Shipe is the owner of and lead advisor for Scholar Advising. He holds a Ph.D. in Finance with a support area in econometrics from Florida State University. He is also a CFA Charterholder of the Chartered Financial Analyst Institute and has completed the CERTIFIED FINANCIAL PLANNER™ certification making him a CFP® professional.

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