On average, people who work with a financial adviser do better financially than those who don’t. While this is a true statement, we should really understand what it means before running out to find one. So what do financial advisers do, and how do you find one?

Saying people who work with a financial adviser “do better” implies something that we can’t know to be true — that they do better because they work with a financial adviser. It implies a causal relationship.

But it could be that people who use a financial adviser are really interested in and working at doing the best they can financially. They might do better than others even if they weren’t using a financial adviser, just because of the type of people they are.

The truth is probably somewhere in the middle. People who use financial advisers are most likely trying to do the best for themselves. They're also most likely receptive to advice.

If you are trying to do the best you can financially and are receptive to advice on how to do so, then working with a financial adviser could be a great option. But how can you find a financial adviser who meets your needs? Let's start with the basics.

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What Is a Financial Adviser?

How to Find a #FinancialAdviser Who Suits You. Make sure that you're getting the best #financialadvice possible. Get the lowdown on how to find a financial adviser who fits your needs. #personalfinance #tipsUnfortunately, there is no universally accepted definition. Insurance agents, stockbrokers, other investment salespeople all claim this title. But a true financial adviser is in the business of providing advice and direction. Managing investments or insurances may or may not be a part of that.

A true financial adviser offers comprehensive services.

Changes in one area of your financial life affect other areas. You need to know this. Advisers may specialize in one area, such as retirement planning or education planning. But they really need to address all areas.

Does an Adviser Have to Be a Fiduciary?

Let’s begin by understanding the two basic types of financial advisers. One type is a fiduciary, who is legally required to put your best interests first. The other type is held to a suitability standard. This means that their recommendations must be suitable for your situation.

Fiduciaries claim that the suitablity standard is a lower standard (true), which means that advisers who adhere to it will put commissions before your interests. There are a few things to keep in mind, though.

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First, the fiduciary standard is the same standard to which lawyers are held. As we can see, this works splendidly to prevent any form of inappropriate behavior. Just kidding.

They're fiduciaries, so they're legally required to work in your best interest. You can decide for yourself how much comfort you wish to draw from this.

People are people, whether they're fiduciaries or not.

Also keep in mind that many suitability-standard advisers put their clients’ interest first. Many in both camps charge their clients based on a percentage of assets under management.

Unfortunately, there are some bad apples in the business. Working with a fiduciary may provide you with some additional comfort. But if you work with a bad person it won’t really make much difference who stole your money.

Commission vs. Fee-Only

Generally, fee-only advisers are fiduciaries, while commission-based advisers aren’t. Even when you work with a fee-only adviser, you'll still have to invest to reach your goals. And the investments will have fees. There’s no free lunch.

The smart thing is to understand exactly what you're paying and what you're getting. Sure, it’s work. But you'll have work either way.

Are Designations Important?

Important, yes. Essential, not so much. For example, the certified financial planner (CFP) designation shows a certain level of commitment. CFPs have studied a lot and have passed some pretty rigorous exams.

There are many other designations. Some are fairly rigorous, others less so. The bottom line is that the vast majority of CFPs are technically competent and receive ongoing training — all good stuff. They've committed to ethical standards.

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But a designation does not guarantee you get great — or even good — advice. Many people without designations provide outstanding advice day in and day out. The designation shows you they meet a high standard for knowledge. That’s a plus, but also shouldn’t be a deal breaker.

How to Find the Right Financial Adviser for You

The greatest predictor of a successful relationship with a financial adviser is how you find him or her. If you were referred to one by someone who is financially successful, has your trust and respect, and has worked with that adviser for a decent period, your chances of success are good. But there are still some things to check.

Your Adviser’s History

There are a couple of ways to check your financial adviser’s disciplinary history, and you should. It doesn’t mean you shouldn’t proceed because someone with 20 years in the business had one complaint filed some time ago.

But someone with eight complaints? There seems to be a pattern here.

The person could be a fine individual with bad luck, but don’t test that theory.

You can check on CFP Board disciplinary records here. You should also look up the individual on FINRA’s BrokerCheck. And see what you can find on your state’s regulatory website. These resources, however, are limited.

Break out your awesome search skills and see what else you can dig up. You may find the individual has a history of activities that make you question their moral standing, even though a formal complaint has never been filed.

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How the Person Works

Once you are down to one or two candidates, you need to meet them. You may be looking for guidance on a single, pressing issue. More often, people are looking for a long-term relationship with a trusted adviser.

You need to know how they work, how often they'll meet with you, and what you should expect. If they know nothing about you and are talking about the returns they can get for you, excuse yourself immediately. Go elsewhere.

The Bottom Line on How to Find a Financial Adviser

Remember, if things seem too good to be true, they usually are. When people assure you of things that are too good to be true, they're probably lying.

The people who get the most from a relationship with a financial adviser are those who get comprehensive advice. When was the last time someone who isn’t selling you homeowners or car insurance really explained what your coverage does? And where you are over-covered and over-premium?

There's a lot of value in having a knowledgeable and trustworthy person review all of your financial matters.

Not everyone needs or wants a comprehensive financial adviser. A good adviser is invaluable for those who don’t have the time or interest to do it themselves.

And for those who don’t even like dealing with finances, a good adviser will help organize your financial life. Then you meet with them periodically for a report on how you’re doing. For many, that’s true financial peace of mind.

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