There’s a ton of bogus crap that people doll out when they are trying to convince you to hire them as a financial advisor. Don’t fall for the BS. Use these tips to find a good financial advisor and avoid the lying grifters!
But before we get to the blog…
Look, there are alot of schmucks out there hawking crap products disguised as financial advice.
Don’t be fooled!
- Please subscribe to my newsletter to receive updates that raise awareness of consumer financial issues. It will teach you how to avoid shenanigans, crap products, and other scummy practices that are unfortunately common in financial advice.
- I wrote a bunch of consumer advocacy blogs here to protect people from all the BS.
- I was recently featured in a MarketWatch article about how to find a good financial advisor. Read it here.
And now let’s get on with it!
What to avoid doing if you want to find a good financial advisor
- First of all it is the Form ADV and not the advisor’s biograph you should be looking at. The biography can be doctored to contain lies and marketing fluff and is probably written by a 25 year old marketing associate who knows nothing about the business. Here is a guide to how to analyze a Form ADV.
- More than the years of experience you should look for the depth of technical knowledge they may have. Credentials like being a third grade teacher in the past are great for showing character but it is a blend. You need them to be your first line of defense from the IRS and the bear market and the cyberthieves, not just a solid person.
- Look for anything that shows a strict adherence to the fiduciary standard or a leadership position in an organization that triumphs the fiduciary standard. If you don’t know what the fiduciary standard is, learn about it here.
- Look for anything that shows control and self sacrifice, example: volunteer EMT, volunteer firefighter, marine or army, peace corps, that they consistently charge lower fees than the rest of the industry, that they do pro bono work for the local women’s group.
- Look for anything that shows high virtue or truthfulness such as being an expert witness that gives testimony in insurance fraud cases, having been a fraud investigator in a past role, etc.
- Look for anything that shows humility, example: I am the mom of a special needs child and its been very humbling
- Read the overall tone of the message. If they are trying too hard or seem to want to appear perfect by bombarding you with virtue signals or bragging, they are probably exaggerating or even misrepresenting. If they are too vague they are hiding something. Example: I held various positions in the industry prior to becoming a financial advisor. This is a signal that something went bad with a past employer otherwise why would they say the name. or they had a business partner that they had a falling out with and that may mean they are a tough negotiator.
- Be wary if they had a top producer award from an insurance or wirehouse, in the “producers club” for 5 years straight – this is a salesperson not a service-oriented, objective financial advisor who is in it for your long term good.
- Be wary if they are bragging about getting awards from a publication. Many of these are awards they paid for, or that they got by being active and visible on social media or having a certain size book of business. It’s a marketing award not a service award and the selection process is very false. I would include the Barrons awards in this category. Check out this blog I wrote about all the BS financial advisor awards.
- Be wary if they brag about their media success. Often these people are focused on marketing at the expense of client relationships and client service. Find a financial advisor whose sole focus is serving their clients, and be wary of anything that implies distraction. Their fees are usually very high and they are a huge expense, so make sure you aren’t paying someone who is going to use your fees as a subsidy to support another business or another activity that does not benefit you.
- Be wary if they run another business. There are some advisors who run these side businesses teaching other advisors how to market or run their practices. This is a conflict of interest. You can find this in their Form ADV but even there they tend to play it down.
Resources to help you
#1 Financial advisor lists
Here are some list of low cost and transparent advisors. If you have questions about anyone on this list, let me know. Also, please understand that this is not an endorsement of any particular company. Please conduct your own due diligence and come to your own decision. Also, I am under no obligation to update this list and the conditions of service offered by these firms may change over time without being reflected here. I have no formalized business relationship with any of the firms listed on these financial advisor lists.
I can’t say it enough – you have to do your own research. This is not an endorsement of anyone mentioned here, and situations could change and not be reflected here in this blog. Also, there is selection bias inherent in this list. I did not interview all the hundreds of thousands of advisors out there, I conducted research using Google, consulted with my network, and posted on social media. So this is limited to what I had access to given my resources. Again, conduct your own research; this is intended to be a starting point but by no means is it exhaustive or conclusive.
#2 Learn their tricks
Consumer advocacy blogs – In these blogs I talk about the bad things that financial advisors do, so you can learn what to avoid.
#3 Leverage Fiduciary resources and learn what a pure fiduciary is
Institute for the Fiduciary Standard houses a library of Advisor On My Side resources. Check it out.
Read about the six core fiduciary duties.
Tips for those who are seeking a good financial advisor
Let me leave you with this:
#1
If you have any questions as you search for a financial advisors, send me a note. I am sick of consumers getting a raw deal and would be happy to hear your questions.
#2
I have a newsletter entirely devoted to advocacy for the consumer. The goal is to educate people so they can steer clear of the traps the financial services industry sets for them. Please subscribe to my newsletter to receive these updates so you can avoid being taken advantage of by shenanigans.
Be safe!
-Sara G
Sources
Rostad, Knut. (9 Sept 2013). Institute for the Fiduciary Standard. Six Core Fiduciary Duties for Financial Advisors. https://thefiduciaryinstitute.org/2013/09/09/six-core-fiduciary-duties-for-financial-advisors/
Stettner, Morey. (9 December 2023). MarketWatch. What to look for — and ignore — when you’re hiring a financial planner. https://www.marketwatch.com/story/what-to-look-for-and-ignore-when-youre-hiring-a-financial-planner-c3c1860d
Disclosures
Grillo Investment Management, LLC does not guarantee any specific level of performance, the success of any strategy that Grillo Investment Management, LLC may use or mention in any of its content, or the success of any program it may mention in any of its content. Grillo Investment Management, LLC will strive to maintain current information however it may become out of date. Grillo Investment Management, LLC is under no obligation to advise users of subsequent changes to statements or information contained herein. This information is general in nature; for specific advice applicable to your current situation please contact a consultant or advisor. I want to be clear that nothing in this podcast or blog can be interpreted as an investment recommendation of any type, or an endorsement of any particular person or their services. The opinions expressed herein do not necessarily represent the views of Sara Grillo or Grillo Investment Management, LLC. Also, nothing in this podcast or blog can be interpreted as legal or compliance advice. For advise on such matters, contact a legal or compliance advisor. Any similarities to persons deceased or alive are entirely coincidental.
