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Twin Cities Five Star award winners

Financial advisor, manager, consultant? Who is the real deal, how can I tell?

By Marc D. Langva, CFP®, Founder & CEO at WorkOptional | mlangva@workoptional.com

According to the Wall Street Journal, there are more than 200 different designation for financial advisors, some common names are “financial consultants,” “wealth managers,” “financial advisors,” “investment consultants,” and “wealth advisors.”

Regardless of the title, what you need to know is that the majority of financial advisors in America are actually just brokers. In other words, they’re paid to sell financial products to customers like you and me in return for a commission.

This matters because brokers have a vested interest in pushing costly products, which might include actively managed mutual funds, whole life insurance policies, and variable annuities. These products typically pay them a onetime sales commission or ongoing annual fees. A broker at a major firm might be required to produce hundreds of thousands in sales. So, these are salespeople under intense pressure to generate revenues. This does not mean they are dishonest. But it does mean they’re working for the house. And remember, the house always wins.

The best financial advisors will add extraordinary value by helping you with everything from investing, to taxes and insurance. They will give you more help than just designing your investment strategy. They will provide holistic advice that’s truly invaluable.

So, how can you tell who is the real deal? I have outlined 5 guidelines below that you should use when evaluating any advisor.

1. If you hire anyone to watch over your money, start by asking them one simple question: are you a fiduciary? If the answer is not a clear yes, it’s time to move on.

2. Then you need to know if your advisor is a Registered Investment Advisor (RIA). They should have no affiliation with a broker dealer or as a dually registered advisor. Of all the financial advisors in the USA, there are only a minority that are RIAs.

3. Certified Financial Planners (CFP®) take a fiduciary oath to act in a customer’s best interest. In addition to showing their competency by taking the test, they are also there to help, and not just sell you the latest financial products. With the combo of a fiduciary and CFP®, your chances of finding the real deal are pretty good at this point.

4. Next, it is extremely important for your advisor to have at least 15 years of experience working with people just like you. Do they have a proven track record? Are they themselves successful with their financial plan? If not, how could they create a successful plan for you?

In an anonymous survey, the Journal of Financial Planning found that 46% of advisors had no retirement plan of their own! Can you imagine hiring a personal trainer who is not fit themselves, or a nutritionist who’s eating junk food while telling you to eat vegetables?

5. Finally, it’s important to find an advisor you can relate to on a personal level. A good advisor will be a partner and ally for many years, guiding you to make true lasting results.

The bottom line is to find a world-class advisor who will help you immeasurably from start to finish: defining your goals, keeping you on a steady path toward them – in particular, by helping you to weather market volatility – and drastically increasing the probability that you’ll actually achieve your goals.

After all, it’s your wealth that’s at hand. And so, finding that right person to preside over your assets in a way that’s in your best interests is essential to the security of your retirement.

 

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*Winners appearing on this page do not pay a fee to be considered or to win the Five Star Award. Professionals with a digital profile have paid a promotional fee.
The Five Star Wealth Manager award, administered by Crescendo Business Services, LLC (dba Five Star Professional), is based on 10 objective criteria. Eligibility criteria – required: 1. Credentialed as a registered investment adviser or a registered investment adviser representative; 2. Actively licensed as a registered investment adviser or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by Five Star Professional, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or Five Star Professional’s consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through Five Star Professional’s consumer complaint process; feedback may not be representative of any one client’s experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria – considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Award does not evaluate quality of services provided to clients. Once awarded, wealth managers may purchase additional profile ad space or promotional products. The Five Star award is not indicative of the wealth manager’s future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their client’s assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. For more information on the Five Star award and the research/selection methodology, go to fivestarprofessional.com. 3,504 Twin Cities-area wealth managers were considered for the award; 671 (19 percent of candidates) were named 2019 Five Star Wealth Managers. 2018: 2,622 considered, 591 winners; 2017: 2,304 considered, 836 winners; 2016: 2,083 considered, 854 winners; 2015: 2,673 considered, 825 winners; 2014: 1,931 considered, 844 winners; 2013: 2,151 considered, 863 winners; 2012: 1,256 considered, 624 winners.