Hiring an investment advisor can be one of the most important decisions that you and your family can make. In fact, studies have indicated that investors who have advisors tend to enjoy better results over time than those without them.
One of the largest investment management companies in the industry, Vanguard, published a study in July of 2022 that attempted to quantify the benefits that advisors can add by providing cogent wealth management through financial planning, disciplined investing, and guidance. According to the report, “Putting a Value on Your Value: Quantifying Vanguard Advisor Alpha” using a wealth manager framework can add up to, or even beyond, 3% in terms of net returns for clients1.
While there are many benefits of having a wealth advisor, finding the right advisor can be a daunting task for even the most seasoned investor. It is important to find candidates who have the right certifications and expertise. Almost anyone can call themselves an ‘advisor’ and the range of services offered can vary greatly. Unfortunately, there are few resources that provide a usable framework on how to make sense of an industry that is filled with conflicting and often conflicted, advice.
To provide a basic framework, we have provided a checklist of minimum qualifications that we believe are important to narrow down the list of potential candidates. If the financial advisors you are interviewing do not meet the basic criteria, then no matter how much you may like the advisor, or how strongly they are recommended, there may be significant reasons why they may not be right for your situation. What follows in the PDF is a list of the items that any investor should consider before hiring a wealth management advisor, and a checklist at the end to help organize your search.