How to choose and work with a financial advisor

A financial advisor reviewing a financial plan with her client.

Assembling a financial strategy is complicated. It’s easy to get overwhelmed. 

A financial professional or advisor can help you make sense of your financial data, focus on your goals, and create a personalized strategy to help you plan your dreams.

“This relationship is a lot more serious than I originally thought when I first got into the business,” says Steve Saladino, managing director in the Principal® office in Tampa, Florida, home to 65 financial professionals. “My clients rely on my experience and guidance. They are ultimately making goals for 20 or 30 years in the future.” 

“It’s a big responsibility,” he says. “One that I don’t take lightly.”

Do you need a financial advisor?

It’s likely. There’s no particular income threshold to work with an advisor, though it’s a common misconception that you need to be rich to do so. Anyone who wants help crafting a plan for their money would benefit. Financial professionals help guide you through specific actions like investing, estate planning, or reducing debt.

A financial professional also can generally help you:

  • assess your current financial situation.
  • set realistic goals for both the short- and long-term.
  • take clear, specific steps to put your plan into action.
  • avoid emotional decision-making about money.

How do you choose a financial advisor?

For something as personal as money, choose a financial professional whose experience and approach you have confidence in.

Ask friends and family for recommendations, or contact an advisor from your employer’s retirement plan, if you have one. Principal® also can help find an advisor near you.

Ways to evaluate candidates:

Background

Experience is valuable, but don’t overlook a younger advisor who may offer new products and strategies.

Credentials

Beyond all the routine insurance licenses and securities registrations, professional designations can include: Chartered Life Underwriter (CLU®), CERTIFIED FINANCIAL PLANNERTM  (CFP®) or Chartered Financial Consultant (ChFC®).

Financial solutions

Does the professional have a specialty in saving for retirement, saving for college, life and disability insurance, or another area? For instance, Isidro Huerta, a financial representative in Coral Gables, Florida, focuses on helping families plan for the financial futures of children with special needs.

Process

Look for an advisor who will walk you through your personal situation, rather than just trying to channel you into a product. This is about your future, and how to meet your own milestones and goals.

Fees

An advisor should explain very clearly how they are compensated for their services. They also should be happy to answer your questions—making it crystal clear on how your relationship works.

How do you work with a financial advisor?

The more good information about your money you can give an advisor, the better your experience will be.

Be prepared.

Your advisor may give you a specific checklist for your first session. The list may include:

  • recent financial statements (checking and savings accounts, stocks, mutual funds, 529 plans, and so on),
  • a list of assets and debts,
  • your most recent Social Security statement,
  • insurance policies (such as life and disability insurance),
  • your most recent tax return, and
  • a list of employee benefits (retirement plans, insurance, etc.).

Be goal-minded.

Have an idea of the lifestyle goals you want to fund or discuss. Advisors can help define specific financial benchmarks to meet them.

Be open.

Stay aware of how emotion may drive your financial decisions. Your tangible goal, for instance, may be owning a lake home. But what you really want to do is spend more time with family and friends.

Be curious.

Write down your specific questions or concerns beforehand. Any financial issues—from minor roadblocks to keeping-you-up-at-night dilemmas—are up for discussion. Maybe you want to reprioritize your budgetsave more, or review your retirement planning strategy. Jot down your thoughts beforehand.

Be a regular.

Once your financial plan is in place, meet at least annually with your advisor to review and update it. Your financial plan will change throughout life’s twists and turns.

Next steps:

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Isidro Huerta, Principal National and Principal Life Representative, Principal Securities Registered Representative. Steve Saladino, Principal National and Principal Life Representative, Principal Securities Registered Representative, Financial Advisor.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities and advisory products offered through Principal Securities, Inc., 800-247-1737, member SIPC  and/or independent broker-dealers. Principal National, Principal Life, Principal Funds Distributor, Inc. and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392.