July 9, 2013

How to Find a Financial Advisor with Success

Source: Shawn Tougas, co-founder of the financial planning and preparation site WealthPrep, is well versed in what it takes to find a financial advisor with a high degree of success.

In the past, we have discussed why it is important to find a financial planner. This time around, let’s take a closer look at a question many people share: how can I find a good financial advisor the first time around?

You should never be under the impression that one financial advisor is the same as the next. Even when this appears to be the case, nothing could be further from the truth. You may not realize it just yet, but there are details that allow some professionals to stand out in this competitive industry.

Find a Financial Advisor Online with these Tips

If you decide to find a financial advisor online you are already ahead of the game. In today’s day and age, this is the best way to not only locate a long list of local advisors but to also compare the pros and cons of each one.

Shawn Tougas created WealthPrep as a means of helping residents of Canada find the best financial advisor without any unnecessary stress. Of course, his advice applies to people all over the world.

We recently asked him several questions, starting with assistance for those seeking a financial advisor for the first time:

1. Do you have any advice for the person who may be seeking a financial advisor online for the first time?

My advice would be to put in the time and do research into what type of advisor is best for them. There are many differences in what an advisor is experienced in and how their business operates. Read up on the different compensation types and what the different certifications mean and then start your search for an advisor. Look at the advisors credentials and contact more than one. Talking to multiple advisors will allow for some comparison of fit and if the advisor is going to work out in the long term.

2. How do you see technology changing the financial industry, in general, in the years to come?

While it is difficult to predict the future, the general trend with technology and professional industries like financial advice is in the direction of transparency, ease of communication, and a more democratized structure. The main force driving that direction is the abundance of information and the ability to access it (it is less asymmetric between the individual and the advisor). Going forward, more advisors will start using the internet to communicate their ideas and promote themselves, which will help in deciding on advisors from the client’s perspective and also provide an easier way for people to educate themselves on their finances.

If you’ll allow me to go off on a tangent, I can’t remember who’s theory this is (I think it might be Dan Pink or a mixture of theories with Nassim Taleb) but technology disrupts industries in many different ways. The analogy I heard was the difference between technologies that act like the radio vs. a forklift. If I’m remembering it correctly, the radio helped build the careers of a smaller amount of individuals who made more money and got more fame, all the while putting the local band out of business. All of a sudden people could listen to the best Reggae singer so they didn’t put much focus on the one Reggae singer in their town. The user was better off because they got to listen to the best of the best but a lot of people were out of jobs. Contrast this with the forklift which didn’t break down access to information or communication barriers but helped productivity. It probably did replace many jobs but it isn’t the best of the best who take over the whole forklift operating industry, it still kept a more equal structure due to the nature of the innovation.

Overall, the financial industry will probably fall somewhere in the middle. There is still a limit to how many clients an advisor can manage so you won’t likely see such a dramatic restructuring like the music industry but as technology advances you might see it easier for advisors to take on more clients and be effective in what they do.

3. What sets WealthPrep apart from the other directories people may find online?  

First off, WealthPrep focuses on Canadian financial advisors, so it does set us apart geographically. We also aim to be more than a simple directory with listings of advisors. The tagline “A Directory of Financial Advice” is meant to mean both a place where somebody can find an advisor and also find financial advice (in the form of articles, tools, and through our q&a forum).

The “find an advisor” component to the site is setup so somebody can see all the possibilities of advisors in their area and filter down until they have the best matches for what they are searching.

For example, the Toronto page shows 1,244 profiles. You can then narrow down your results by specialty, compensation type, language, and profession type. Also, after you click on a profile it will show ratings and reviews for that advisor and suggest similar advisors. All of this is meant to increase the value to the end user and match them with the best advisor for them.

Final Thoughts

Now that you know how to find a financial advisor with success, with the help of the internet, there is one more question to answer: is this something you are interested in doing at the present time?

Even if you don’t end up hiring a professional right now, there is nothing wrong with learning more about the process and educating yourself on what you should consider when the time comes.

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