Know How to Work With an Advisor

If you find the right advisor, the relationship can be very rewarding. You want someone with good credentials, who works with clients like you, gives you the time you deserve, and genuinely cares about your financial and family needs. Here are steps to consider and questions to ask, plus the different ways advisors charge.

It may take some effort to find a professional to help you with investing, portfolio strategies, and retirement planning. But if you find the right person, the rewards can be considerable.
A good advisor will get to know you, not just your net worth.
Where to look
Start by asking friends and family for referrals. You want someone with good credentials who works for a reputable firm and has years of experience. (Wells Fargo Advisors, which is part of Wells Fargo & Company, has nearly 16,000 financial advisors.)

Keep in mind that credentials alone do not make a suitable advisor. You’ll want to talk with the person you’re considering to ensure that his or her values are aligned with your own.
Go for a free consultation
Once you’ve found at least two potential advisors, go for free consultations. Be sure you have an unrushed meeting and a candid conversation. A good advisor will try to get to know you, not just your net worth. Keep these questions in mind:

  • What is the advisor’s expertise? You should be able to call on your advisor for all kinds of financial advice, involving budgeting, debt management, and tax-efficient investing. Your advisor should also be familiar with education-funding vehicles, estate-planning, and the rules for charitable giving.

  • Are you a good fit? The advisor needs to understand your risk tolerance and give you the time you need. It may help if the advisor works with clients like you: If you’re self-employed, for example, you may want someone with expertise in that area; the same is true if you’re divorced or widowed. You also want to know if the advisor works with clients who have roughly as much money to invest as you do.
Ask for a sample
When you meet with an advisor, ask to look at a sample client statement. The idea is to see the types of reporting available to you. You’ll want to be sure the advisor can clearly explain the various segments of each statement and what they mean to you.
How advisors charge
Advisors charge in different ways:

  • A fee-only advisor might charge an hourly fee for advice, and a more substantial sum for a complex financial plan. You’ll also pay a percentage of any money she manages — whether your portfolio goes up or down.
  • A fee-and-commission advisor might charge less for a retirement plan, but will earn commissions on investments you buy and sell.
  • At some firms, you can work with a salaried advisor who will design your plan for a one-time charge of a percentage of your portfolio’s value. The advisor will also answer ongoing questions without any further fees. If you like, the advisor can handle your money for an annual charge of a percentage of your assets.
  • Finally, you can get a fee-based managed account with a broker at a brokerage house. These brokers charge a percentage of assets annually.

Key Points:

  • Ask friends and family for referrals, and make sure your candidates have good credentials.
  • Pick at least two advisors and go for free consultations.
  • Be sure the person you select understands your risk tolerance, is willing to give you the time you need, and is a good fit, in terms of your goals and values.

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