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This is one of the rites of passage I haven’t quite reached yet as a young professional.  I’ve graduated from college, gotten a job, and put together a budget that isn’t based solely on shopping and weekend activities (it took a while – sorry Mom and Dad). I’ve also made a habit of putting money into a savings account and become an expert at keeping track of my bills.

The one thing I haven’t done to take my financial know-how to the next level is getting down to brass tacks with an advisor.  In this digital age, I’ve found it easy to get all my banking done online, but there’s something about a little human interaction to make me more confident about how, where, and why to invest my funds.

I’m certainly not obtuse when it comes to money, but something about stocks and bonds puts my head in a flurry of confusion.  My finances are now one of those things I take very seriously; vaguely similar to how I formerly treated my golf game.  For years, I put my trust in an expert to strengthen my swing and skills to perform under pressure at the highest of levels.  I suppose I could have read magazines, watched The Golf Channel, and listened to the advice of other range rats, but hey, I wouldn’t have reaped the dividends that made me successful.  I’ve got nothing against the do-it-yourself and online routes, but l know I’ll prefer to entrust my investing with a professional, just like I did with my golf career.  Here are some of the points I’ll consider before searching for and hiring a financial advisor:

The search for a financial advisor:

Get recommendations from friends, family, and coworkers.

If they’re willing to share some of their investing habits with you, ask around to see if anyone you know has an advisor they trust.  You’d never switch hairstylists without first getting some first-hand suggestions, right?  I must have complete faith in a person before I let them take scissors or dye to a single strand on my head, and I look at my money the same way.

Determine whether you should hire an advisor in a group setting (such as Merill Lynch or Morgan Stanley) or an independent wealth manager.

Unsure of the difference?  It’s similar to seeing an insurance agent.  If you’re purchasing car insurance from somewhere like Allstate, you’re not going to have a choice of the brand of insurance you’ll get.  With an independent agent, you have the ability to choose from a buffet.  It’s the same for financial advisors: if you see someone with a company, you may be limited to its name-brand funds, versus a manager who gives you flexibility and options in investing.

Preparing for your visit with a financial advisor:

Find out what services the advisor provides.

Does their service include online statements and updates?   How often will you and your advisor perform portfolio reviews?  You wouldn’t want to go to a restaurant and have minimal options on the menu (although I’ve been to a few fancy places where choices are limited), thus the same applies for your advisor.  Make sure you’ll get all the services you need for saving and investing – you’re the one paying for it, so make it worth it!

Learn how the advisor will charge you.

There are typically two different methods of payment to your advisor: one is fee-based, the other commission-centered.  At a fee-based advisor, you’ll be charged each time you request their construction of a personalized financial roadmap, regardless of whether or not you invest.  On the other hand, you could visit a commission-based manager twenty times and obtain forty different roadmaps, but not be charged a dime.  If you’re still on the fence about investing, choosing a commission-based advisor is a safer route since you won’t be charged until you put your funds in their hands.     

Does the advisor have credentials and a record of integrity?

DO: Check the background of the advisors you’re considering.

DON’T: Give your money to strangers. DUH!

Advisors have to obtain something known as a Form ADV, and if they’re not properly registered, they won’t have one.  If you found the advisor via a recommendation, ask if the person who suggested them has already completed this precautionary check.

Make a detailed list with your goals for investing and saving. 

Don’t go in unprepared.  It’s unlikely that a financial manager would ill-advise you, but it’s wise to have a rough plan.  Do a little research in what type of investing would benefit you, while remaining within the realm of your budget.  When it comes to retirement planning, it’s probable you know roughly how much you’d need to spend your twilight years comfortably.  Also note an amount of money you’d be currently looking to invest in stocks, bonds, or mutual funds.  If you have emerging plans of long-term expenses like purchasing a home or car, or perhaps getting married and having kids, share this as well.  Knowing all possible information will help an advisor get an educated idea of how to point you in the right direction.

Questions to ask at a financial advisor’s office:

Most advisors have their eyes out for an “educated” investor.  Be sure your advisor is willing to make things simple for you and answer any and all questions.

This is likely the most important factor for me, since I’m pretty much a newbie to investing.  Retreating to my golf coach example, I connected well with my long-time teacher because he was patient enough to explain complex swing techniques to me until I fully understood them and was able to execute the concept.  If I were still unsure, he’d take the time to describe it again in a different way.  The same applies for any advisor I’ll ever see: I’m no bonehead, but they must be willing and able to make things easily illustratable for me if I need it.

Ask how many clients the advisor has.

Besides getting an idea of how much individual attention your portfolio will receive, finding out how many clients the advisor has will indicate the likelihood of building a more personal relationship.  It’s kind of like a university setting: would you rather sit in a class of 499 other nameless students or actually get to know a professor in a small group of 25?  It’s not to say your portfolio won’t excel through an advisor that has many clients, but I find it crucial that I’d have the chance to get to know someone I’d be entrusting my money.

Find out what’s in their portfolio.

A quick and simple question, but use it to scan a possible investing agenda they might set for you in the future.  Just imagine giving them a little free reign in picking options for you, only to find out that if they’ve got a whole portfolio of tech-related stocks and will choose the same for you, when you’d prefer a more diverse plan.

Learn how a young investor’s portfolio should be diversified. 

Asking this will give you a little insight toward what is and isn’t performing well for other clients (and the advisor), if they hold similar goals to yours.  In addition, the advisor will consider your age as a factor in the amount of time your investment will have to grow.  He or she may suggest a financial plan that will blossom at a better rate over a greater period time, as opposed to a path recommended for someone getting a later start in building their portfolio.

After you’ve chosen someone you trust, here are a few additional topics to discuss with your financial manager, apart from portfolio administration:

• How do I set a realistic budget for my starting salary?
• How can I start building good credit?
• I’m a little behind in paying off student loans.  What can I do to catch up?

If you’re young, fresh out of college, and attempting to manage your finances away from mama and papa bear, there’s no better time than now to consider taking your investing and saving possibilities to the next level.  Are you a young professional creating a solid portfolio with the help of an advisor?  Tell us about your experiences with a financial consultant!

Stephanie Koske is a contributor for the Quicken Loans Zing Blog.  Stay connected with us on our Facebook page and our Twitter page to find out all the ways we’re Engineered to Amaze.

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