Financial Planning Experts

Top 5 Mistakes to Avoid When Selecting a Financial Advisor.

Choosing a financial advisor is a big decision. In fact, the decision could determine your financial trajectory for years to come. Here, APO Financial gives you five common mistakes people make when engaging a financial advisor. 

When it comes to money management (and life in general)  having a plan can make all the difference. A financial plan is a strategy that you set in order to meet your financial goals. With a financial plan you can manage your cash inflows and outflows and properly forecast future financial needs. While this may sound like a simple concept, there’s often more than meets the eye. This is why hiring a financial advisor can be beneficial in meeting your financial needs and goals. Let’s be honest: Not everyone has the time or desire to become a financial expert. 

A quick Google search will quickly overwhelm you with hundreds – if not thousands – of results. With so many individuals claiming to be financial planners, financial advisors, wealth managers and fiduciaries, how do you avoid making a detrimental mistake in hiring the wrong person? 

Here are the top 5 mistakes to avoid when selecting a financial advisor.

Hiring a Financial Planner on Sentiment

When you hire a financial planner because of an existing relationship with them, then you might be making a big mistake. You should hire a financial planner based on your current and future financial needs. Also, you must ensure that such a person is absolutely qualified to handle your financial needs.

Once you notice your financial planner is not adapting your finances to your current financial situations for a better long-term financial position, then it may be time to make a change.

Not Asking about Credentials

To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.

Asking your financial advisor about their credentials will give you a sense of security that they know what they’re doing and that they’re capable of handling your finances.

Finally, are they registered with the SEC (Securities and Exchange Commision)? The SEC protects investors by enforcing our nation’s securities laws, taking action against wrongdoers, and overseeing our securities markets and firms to ensure that investors are treated fairly and honestly. Before entrusting a new advisor, make sure they are a part of this independent, public agency of the US government.

Confusing Brokers with Financial Advisors

Brokers typically handle a part of your financial life (your investments), but they aren’t charged with looking at your entire financial life (unless you fit high-net worth criteria). A good financial advisor will look at your whole financial picture: insurance, estate planning, tax planning and investment management and more.

Brokers and investment advisers are regulated by different bodies and require different qualifications for practice (e.g., FINRA regulates brokers and the SEC regulates investment advisors).

Failing to Discuss Philosophies

An investment philosophy is a set of beliefs and principles that guide an investor’s decision-making process. It is not a narrow set of rules or laws, but more a set of guidelines and strategies that take into account one’s goals, risk tolerance, time horizon, and expectations. 

In addition to finding out how the advisor plans to help you reach your goals, you also want to discuss how he or she handles a down market and deals with other changes in the overall economy. Get a feeling for his or her overall philosophy — very conservative, very aggressive, somewhere in between?

Choose an advisor that thinks expansively about the possibilities of life, that understands your personal resources and helps you best utilize those resources. 

Blindly Following Your Advisor

Financial advisors need to lay out your issues before they start suggesting solutions. This usually involves asking a series of questions about your unique financial situation, your goals, and your income. For example, if a financial advisor starts “prescribing” investment recommendations without asking enough questions to fully understand your situation, you should probably be cautious.

Lastly, It’s important to note that a financial plan is a living and breathing document. That is why you want to be sure that there is an ongoing arrangement for your financial plan to be maintained and updated as your life changes. This isn’t a one-and-done process, so be sure to review your current plan at least every six months with your chosen advisor. 

Final Thoughts

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.

At APO Financial, we spend quality time with you going over the building blocks to help you understand defensive investing and regularly update you on your investing results. Our goal is to create income that lasts. 

We help build real-life, sustainable income plans for our clients that take all factors into account. And we continually update and monitor these plans throughout our clients’ retirement years.

For more information on our financial services, contact us here today.


Investment advice is offered through APO Financial Services, LLC. Insurance and fixed annuity products are offered through our affiliates, Asset Protect One, Inc. and/or APO Financial Services, Inc. No persons associated with APO or its affiliates is a licensed attorney or tax professional and nothing on this Page should be considered tax or legal advice.
It is important to read our disclosures available at this link: https://apofinancial.com
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