The number of Americans that have sought help from a financial advisor has increased tremendously over recent years. The primary reason most people seek professional assistance is their finances have become too complex to handle on their own. Some want to avoid repeating a financial mistake again or realize that they don’t pay attention to their finances enough. Or it may be that our lives have become busier and the financial landscape has become too complex and time-consuming to manage on our own. We want to help simplify the process for you by providing a guide to find the best financial advisor for you.

The primary steps in evaluating the right advisor for you are to:

1. Determine Your Needs 
2. Understand How Advisors are Compensated
3. Evaluate Credentials and Experience
4. Conduct a Firm Evaluation

This 5-minute article should help you save hours in your search for the best financial advisor and help you avoid making any costly mistakes.

Determine Your Needs

As with a good financial plan, your search for a financial advisor should be centered around your specific needs. While most traditional financial advisors from the 1980’s and 1990’s focused on investments and stock-picking, many financial advisors today provide comprehensive financial planning services to their clients to help them make better financial decisions. 

We are inundated with information these days, which is what makes self-managing one’s finances so difficult. Having a professional that truly understands your goals in life is crucial in helping you plot the shortest and most efficient path from point A to B. 

What percentage of your income do you need to save to retire at a certain age? If you saved X amount more, how many years earlier could you retire? Does keeping your target retirement age the same, but spent 15% less change things? 

These questions are an example of the types of questions you should be asking yourself and your financial advisor candidates. You want to gain a thorough understanding of their knowledge, education and scope of services offered. Will they review your tax return? Ask them about their typical client – does that sound like you?

Part of a sound financial plan is to have an investment philosophy that reflects your goals and it’s important that you and your advisor share a similar philosophy.  If you are seeking an active investment philosophy (trying to outperform market indexes), then a financial advisor might help you construct an allocation and find suitable active managers to attempt to outperform the market. You should keep in mind that this approach is expensive and can be tax-inefficient. Also, many studies show that this investment strategy can underperform a portfolio comprised of index funds. 

If you are only seeking investment management and don’t want to pay the higher fees associated with active management, then a passive strategy can be pursued through index funds exchange-traded funds (ETF’s) or through a number of different robo-advisors. A passive investment strategy is predicated on the belief that markets are efficient and that buying indexes that track the market is more effective than the higher costs and low odds associated with beating the market. A passive investment strategy will typically be lower in cost and more tax-efficient than an active strategy and has more support from the academic community.

Understand How Advisors are Compensated

The most crucial element that must be understood about the person giving you financial advice is how they are compensated. A Fee-Only financial advisory firm receives all of its revenue from its clients as opposed to any third parties. Simply, the firm or advisor charges their client’s a fee for the advice that is being provided. 

There aren’t any other commissions or alternative sources of revenue from sales of products that could influence the advisor’s objectivity. Because after all, you are hiring someone to provide advice that’s in YOUR best interest, not theirs. Fee-Only advisors are also held to a fiduciary standard in working with clients, so by law, they must always act in a prudent manner for their clients. Working with a Fee-Only advisor is the best way to ensure you are getting objective advice free from conflicts of interest. 

In addition to Fee-Only financial advisors, there are a number of other financial professionals that are commission-based and earn the majority if not all of their income by selling a certain number of products or opening a certain number of accounts. Products come in the form of insurance products such as annuities, mutual funds, or even private investments. 

This is not to say that all commission-based financial professionals are acting in bad faith. However, under current law, the only protection the consumer has is that these professionals recommend products that pass a “suitability test,” but not a fiduciary test. Under the suitability test, they can sell any products that are suitable, but they do not have any legal duty to their clients.

Evaluate Credentials and Background

No assessment of hiring any professional is complete without a thorough analysis of that individual’s resume. Finding an advisor with the CFP® designation should be at the top of your list when evaluating credentials. The CFP® certification is the most recognized and rigorous credential for financial advisors and requires proficiency in all areas of financial planning.

The list of designations is nearly endless and while some may imply additional knowledge and expertise, none require the same experience, testing, educational, and ethics requirements presented by the CFP Board. While the CPA and CFA credential programs are well recognized and accepted, they are focused on taxes and investments, not the broader financial picture. 

Let’s face it, experience matters. You are going to want to know how many years the advisor has been working with clients. If you are working with a younger advisor, it doesn’t hurt to ask if there will be another senior advisor involved in the relationship. Working with a more experienced advisor who has advised clients in similar situations goes a long way in getting reliable financial recommendations.

If working with a broker, you can perform a background check by searching for their form U-4. This form will provide you with all sorts of information about the advisor like have they ever committed a felony or misdemeanor, filed bankruptcy or been involved in any lawsuits or violations of securities laws.

Firm Evaluation


One of the most overlooked criteria in searching for a financial advisor is determining what type of client they work with.  As more financial advisors have made an effort to provide financial planning services, many advisors have become subject matter experts in one niche. 

There are financial planners that specialize in employee stock options, business owners, millennials and retirees. From college planning to retirement planning and everything in between – there’s an expert for that. Aside from ensuring that you are working with a  Fee-Only CFP®, working with an advisor that is a specialist in your area of need may be the most critical factor to evaluate. 

If you are approaching retirement you need to know how much you can spend, how to replace your income, when to take Social Security, etc. Ideally, you want to work with a firm that helps retirees since they will have the expertise, resources and experience to provide you with the best solutions to your problems. 

Firm Type and Size

One thing that has changed over the last 20 years are the number of independent and smaller Registered Investment Advisors (RIA). Advancements in financial technology platforms and dedicated platforms from the largest custodians (Fidelity, Charles Schwab & TD Ameritrade) have allowed smaller firms to offer a more boutique-style personalized approach than larger firms. In some instances, you may even be directly working with the founders of the firm, who are typically more seasoned advisors and also business owners. RIA’s have been the fastest-growing segment in the financial advisory realm in recent years.

Outside of RIA’s, the most populous platform to work with a financial advisor is through a brokerage such as Merrill Lynch, UBS, Raymond James or Edward Jones just to name a few. Even your local bank has a licensed securities branch representative who can sell you financial products.

Again, broker-dealers are not held to a fiduciary standard, and the products they sell all pay them different types of commissions, so make sure to understand the costs associated with the investment and how the broker is being compensated. Some representatives are under salary & bonus structures, but bonuses are typically tied to selling a certain type or number of products. At the end of the day, it’s your right to understand any conflicts of interest the advisor has, so you shouldn’t feel that these questions are inappropriate.


As a potential new client to a firm, you should be paying close attention to the initial onboarding process. Most firms have an initial meeting with some type of free evaluation of your situation. You want to ensure that the advisor is being transparent in all facets of the relationship, especially how they are compensated and the types of clients they serve. 

Most importantly, how much time are they spending upfront to gain a thorough understanding of your life goals. This will be paramount to a successful relationship because a good financial plan is a result of how much the advisor understands your core values and goals. They should be helping you make financial decisions that are in alignment with what’s most important to you. 

If you are working with a comprehensive financial planner, they will most likely request a number of documents, but tax returns, insurance policies and investment statements are some of the most common documents for the planner to begin their analysis. Depending on how thorough the initial process is, they may also need to spend more time with you to clarify goals more clearly prior to making recommendations. 

If you aren’t working with a financial planner, then your onboarding process with a broker or agent will most likely be to review a final proposal or illustration and sign the paperwork depending on the type of financial product you are purchasing.

Once you have made your decision and completed your client onboarding process and have implemented all recommendations, you should feel good about unifying your goals with all of your financial decisions. At this point, you should know how many times a year you will be meeting with your advisor, how to access online portals and what type of reporting you will receive.

While it may take some time effort before you find the right fit, you don’t want to cut any corners in finding the best financial advisor for you. However, if you know that you are looking for a Fee-Only financial planner, then you can really start your search by looking for a firm that specializes in your needs. From there you can continue your evaluation of the firm and the advisor you will be working with. There are also a few websites such as NAPFA and the Fee-Only Network that offer databases of Fee-Only planners to help make your search easier. Aside from your doctor, you will probably interact with your financial advisor more than any other service provider in your life, so make sure to hire the best one for YOU.

None of us will ever forget what we are going through right now – I know I won’t. It so happens that my birthday dinner plans fell on the same Friday that “shelter in place” orders were declared in California. As I sat on my couch by myself watching the movie Contagion (might as well get in the spirit) and eating popcorn, I began reflecting on how the shutdown would impact our daily lives.

We are experiencing a global event that has changed the ways we work, socialize, commute and collaborate – nearly every facet of our lives will be impacted. This is in addition to the economic and financial challenges presented before us. It has been over 2 months since shelter in place orders were announced in California. The term “new normal” has become a common phrase we have grown accustomed to as many of us have been relegated to working from home or working remotely in some form or fashion.  

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The massive $2 trillion stimulus package that was recently passed to help Americans through the Coronavirus pandemic affects every business and individual in our country one way or another. It is roughly 3 times as great as what we received from the great recession that began in 2008. One of the primary differences of the recent stimulus is that it is going mostly to the low and middle-income consumers and small business owners as you can see from the diagram below. This is very different than 2008 when the fiscal stimulus didn’t really trickle down to these cohorts that are more inclined to spend it.

We have summarized some of the key portions of the CARES Act that we feel will be most pertinent to you.

Federal Tax Filing Deadline Extended

The federal tax filing deadline has been extended to July 15th. You don’t have to file your return or make payments until then. The extended deadline applies to 2019 IRA, Roth IRA, and employer profit-sharing contribution deadlines as well.

While California has extended their deadline, not all states have followed suit. You can find your state’s filing deadline here.

Stimulus Checks

Single adults who have an adjusted gross income of $75,000 or less will get the full $1,200, while married couples with no children and earning $150,000 or less will receive a total of $2,400. For every qualifying child age 16 or under, you get another $500.

People who earn more will see their payments decrease until they phase out completely. That happens for single people earning $99,000 or married people who have no children and earn $198,000. Your 2018 or 2019 Adjusted Gross Income amount will be the determining factor.

However, if you make under those thresholds in 2020 – you actually will be eligible when you file your 2020 tax return, so you will have to be a bit patient.

There are other situations that make certain people ineligible — college-age children who were claimed as dependents on their parents’ returns won’t receive a check, for example. And you generally need a valid Social Security number to collect as well.

Most people don’t have to do anything to receive the payment. If the Internal Revenue Service already has your bank account information (i.e. you get your tax refunds direct deposited), it will transfer the money to you via direct deposit based on the recent income-tax figures it already has. Payments are expected to start landing within the next few weeks.

Retirement Plans

IRA and qualified plan distributions – A qualified individual can take up to $100,000 in “coronavirus-related” distributions in 2020 and:

  • Not have to pay the 10% early distribution penalty even if you are under age 59½; and
  • Not have to withhold 20% in federal income taxes; and
  • Not have to pay tax on it if repaid within three years; or
  • Elect to spread the inclusion of income over three years.

Qualified plan loans – Another option is to borrow from your retirement plan. The CARES Act increased the loan maximum from $50,000 or 50% of your vested balance to $100,000 or 100% of your vested balance. This is for any money borrowed between March 27, 2020 and December 31, 2020. For individuals with existing loans, the due date for the loan repayment is suspended one year.

Taking a loan means liquidating securities in your portfolio and with most asset classes down year-to-date, you risk the chance of selling at a loss and missing the rebound. Make sure to consider other types of loans you may be eligible for before taking a qualified plan loan.

RMD’s suspended this year – The Act suspended the minimum distribution requirements for 2020. This includes distributions from most qualified retirement plans (but not nongovernmental 457(b) plans) and IRAs, including inherited IRAs.

As a reminder, the recently enacted SECURE Act (January 1st, 2020) changed the required beginning date from 70½ to 72, but this change only applied if you had not yet turned 70½ before 2020.

The key takeaway here is that if you had already started taking your mandatory distributions or you had an inherited IRA, you don’t have to take a distribution in 2020. This gives you the chance to let your plan balance recover from the downturn in the stock market before you take any money out. It also allows you to save money on taxes or you consider a Roth conversion as an alternative.

If you already took your required distribution from your IRA in 2020, you have 60 days from the date of the distribution to put it back and not be taxed on it. Roth conversions in lieu of distributions this year is another option that can make sense, depending on your tax situation.

Unemployment Insurance

The new stimulus made significant, albeit temporary, changes to the way the unemployment insurance system works and increases benefit amounts until July 31st. It temporarily increases the amount of benefits by $600 weekly.

It also extends by up to 13 weeks the time period for which state-level benefits are available for many workers. States set many of their own rules, including benefit amounts. You should visit your state’s employment development office website for more specific information.

Federal Student Loans

Borrowers of federal student loans will be placed in administrative forbearance, which allows you to temporarily stop making payments from March 13th until September 30th. No interest will accrue during this period and interest that you accrued before the period began will also not be rolled into your loan principal. Borrowers can continue making loan payments to pay down balances faster if the full amount of your payment can be applied towards your loan’s principal.

Loans issued through state agencies and others, including big private lenders like Sallie Mae, are not covered. Other loans not covered include the majority of Federal Family Education Loans, which are mostly held by commercial lenders, and school-held Perkins loans.

Some private lenders are offering relief programs, such as Sallie Mae who is offering suspension of payment for up to three months, with no damage to a borrower’s credit. Navient made an identical offer for “qualified” borrowers. It’s advisable to contact your lender to determine what relief programs are available to you.

Housing Payments

The Federal Housing Finance Agency has instructed mortgage servicers to allow borrowers whose mortgages are owned by Fannie Mae or Freddie Mac to delay payments. This program allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.

Federal housing officials have also announced a nationwide eviction and foreclosure moratorium for borrowers of Fannie or Freddie mortgages or borrowers whose loans are backed by the Federal Housing Administration (F.H.A. loans).

A nationwide eviction moratorium is in place for any renters whose landlords have mortgages backed or owned by Fannie, Freddie or the F.H.A. This will last through the end of July, and landlords can’t charge any fees or penalties for nonpayment of rent either.

Business Owners

Small business owners (under 500 employees) were a key demographic targeted by the stimulus and relief is being made available through up to $10million in forgivable loans to cover employee payroll or immediate tax credits – you cannot receive both, however.

Paycheck Protection Program The CARES Act allocated $350 billion to small businesses under the Paycheck Protection Program. This program provides 100% federally guaranteed loans to small businesses with the goal of helping them keep their employees employed during the COVID-19 pandemic and any resulting economic downturn.

The program is administered by the Small Business Administration (SBA) and started accepting applications on April 3, 2020. A key feature of this program is that all or part of the loan may be completely forgiven.

To qualify for loan forgiveness, the loan proceeds must be used to cover payroll costs, mortgage interest, rent or utility costs over the 10 week period after the loan is made. Additionally, the number of employees and compensation levels must be maintained.

The loans can be for an amount up to 2.5 times the employer’s average payroll costs, not to exceed $10 million. Payroll is capped at a $100k rate per employee and the number of employees is capped at 500.

The amount of loan forgiveness may be reduced if there is a reduction in the number of employees or a reduction greater than 25% in the amount of wages paid to the employees of the business. Any reduction in the amount of loan forgiveness can be reduced or eliminated if the business restores the reduced wages or brings back any laid-off employees by June 30, 2020. All small businesses and even self-employed independent contractors are eligible for the loans.

Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. This is a great deal for small business owners that qualify.

Employee Retention Credit – The bill offers a refundable payroll tax credit of up to $10,000 of wages paid to an eligible employee during the crisis. This credit is available for both for-profit and non-profit businesses and is available to all employers regardless of size.

To be eligible, businesses must fall into one of the two categories:

  1. The employer’s business must have been disrupted by government restrictions that have resulted in a full or partial suspension of their business operations.
  2. The employer’s gross receipts have gone down by over 50% year-over-year beginning from the same quarter in 2019. Once gross receipts go above 80% of the same quarter in 2019, the employer becomes ineligible for the credit at the end of that quarter.

The wages of employees who were either furloughed or whose hours have been reduced are eligible for the credit. For employers with 100 or fewer employees, all employee wages for full-time employees are eligible regardless of whether the employee was furloughed.

The amount of the credit is 50% of qualified wages capped at $10,000 paid to an employee after March 12, 2020, and before Jan. 1, 2021. Eligible wages taken into account are not limited to cash payments, but also include a portion of the cost of employer-provided health care. The employer will receive the credits, and any refund if eligible, through their quarterly payroll tax filings.

As we continue the fight against coronavirus in our country and globally, one thing has become fairly clear: social distancing and shelter in place guidance have seemed to be the most effective tools to combat the spread of the virus. The dilemma is that the longer we continue with most of the economy shut down, the greater the financial impact. At some point, the economy will have to reopen. The manner in how we assimilate back to our normal lives will have a strong influence in continuing to control the spread of the virus. As the situation continues to develop, it is very plausible that more stimulus could come our way this year. We will continue to keep you posted on how these changes impact you. Stay safe and remember to be extra kind to one another in the face of these challenging times.