Financial Advisor Colorado Springs
How to Find A Financial Advisor in Colorado Springs, Colorado
Finding a good financial advisor can be a daunting task, but an important one. There are over 1,000 financial advisory firms in Colorado Springs alone. However, there are some solid ways to narrow down the search to find the best financial advisors in the Colorado Springs, Colorado area. Let’s dive into them…
#1 Look For a CERTIFIED FINANCIAL PLANNER™
If you do only one thing during your search for a financial advisor in Colorado Springs make sure it is this one. Check to see if the advisor is a CERTIFIED FINANCIAL PLANNER™ – CFP®. Simply go to the CFP® website and search the advisor’s name. This is also a great place to start your search if you haven’t already found an advisor to vet as you can simply search by your area or zip code.
A CFP® is a designation that will help you know that the advisor is held to strict fiduciary and ethical standards. It is an easy way to tell which advisors truly have your best interest at heart vs those who just say they do. Read more about all the benefits of using a CERTIFIED FINANCIAL PLANNER™ here.
While it is one more step than simply typing “Financial Advisor Near Me” it can have the biggest impact on your search.
#2 understand what type of advisor they are & How they are paid
It is important to understand that not all financial advisors are created equal. In fact, there are three different types or classifications of financial advisors and each gets paid differently.
- A broker or broker-dealer
- Dually registered advisor or hybrid
- Register investment advisor (RIA)
broker or broker-dealer
First, if they are a broker or a broker-dealer, this is a red flag. It means they receive a commission based on the products they sell. With this type of advisor, it is difficult to tell if they have your best interests in mind as they are only required to follow the “suitability standard” as regulated by FINRA. For example, a broker could recommend a Mutual Fund that is ten times more expensive to own than a comparable Exchange Trade Fund. This is acceptable because it could still be considered “suitable” for the investor. Unfortunately, this is the type of advisor that is the most common.
Dually registered advisor or hybrid
Next, is a dually registered or a hybrid advisor. Beware of this type as well. While they are registered investment advisors they are also licensed through FINRA. They wear two hats. This means they can have accounts where they are acting as fiduciaries and then have another account with the same client in which they act as a broker. Ironically, they can charge a fee and a commission. They often have numerous conflicts of interest. This includes cross-selling insurance products and revenue sharing with mutual fund companies, for instance.
Register investment advisor (RIA)
Ideally, you want to look for a Registered Investment Advisor or RIA for short. These advisors have a legal obligation to act as fiduciaries. Meaning that they have to act in your best interest at all times. Further, a Registered Investment Advisor must explain upfront how they receive compensation and are regulated by the SEC. Additionally, they are fee-only. A Fee-only structure means they do not receive commissions or other payments from the providers of financial products that they recommend. Fees vary but generally average somewhere between 1-2% of the total value of the investments under management. Plus, an RIA must disclose any conflicts of interest.
As you can see, make sure your financial advisor is at the very least a Registered Investment Advisor. This will help you to avoid some common pitfalls when hiring an advisor.
#3 CHECK THEIR STREET CRED
When looking for a good financial advisor it is important to research their background. You’ll want to make sure there are no disciplinary actions and complaints filed against them.
It’s important to check into the person handling your money. Beyond looking to see if they are a CFP®, here’s how to dig a little deeper.
Your first stop should be the Investment Adviser Public Disclosure website from The Securities and Exchange Commission (SEC). The IAPD publishes information on a financial advisor’s education, licenses, designations, and registration history. It also lists criminal convictions, civil judgments, arbitration awards, and other disciplinary actions.
You may have also heard of Broker Check by FINRA. While this is a helpful site, it is important to note that it only gives you data on brokers and broker-dealers. They will however direct you back to the SEC site for information on Registered Investment Advisors.
Regulation of Registered Investment Advisors
It is worth noting that the SEC regulates Registered Investment Advisors that manage over $110 million in client assets. While state securities regulators have jurisdiction over advisors who manage up to $100 million.
Advisors with less than $100 million in assets under management must register with their state. If you want info on those you will need to check with the state securities office. Alternatively, for a Colorado Springs Financial Advisor that would be the Colorado Department of Regulatory Agencies Division of Securities.
Lastly, while not as technical as going to a regulatory website it may be helpful to check reviews. A simple Google search for Financial Advisor in Colorado Springs will pull up relevant Google reviews to help you get a sense of if their clients are happy or not. It is just an extra step that can potentially bring some additional peace of mind.
#4 are They Local To Colorado Springs
While not an essential requirement, there are benefits to having a local independent financial advisor in Colorado Springs. Choosing a local financial advisor allows you to meet face-to-face with, and know the person who will be giving you advice. Many national firms can’t afford to do this.
Where large national firms are concerned, it’s more likely you’ll be dealing with people who serve as the buffer between you and the actual planners and portfolio managers who do the work. Your “advisor” at one of these firms is likely to be an account manager. The “planning” is done by a planning department. Your investment analysis comes from an analyst. Both of whom are disconnected from your life in many ways. You won’t have much exposure to actual an financial advisor because this is not what the large firms are set up to do.
However, when you work with a local, independent, service-oriented financial advisor, you can expect to conduct a face-to-face meeting at the very least once every 90 days.
It is important to find an objective advisor who is fully committed to and uniquely involved in, achieving your goals. Furthermore, it can help to have someone local if you like the one-on-one personalization.
#5 Interview multiple Financial Advisors
Just as you would want to get multiple bids to remodel your home, it is a wise idea to interview multiple financial advisors to find the best fit for you. Not only can you get a feel if you like the advisor personally, but it will also give you an opportunity to ask some important questions.
First things first, if you haven’t already, confirm that they are a CFP®, Fiduciary, Fee-Only, Registered Investment Advisor.
Next, find out where they hold custody of your assets. Where custody is held is important because it is where fraud can happen. Most reputable financial advisors will use third-party custodians, such as Charles Schwab or Fidelity. Consequently, the advisor services your accounts but then the custodian reports everything to you. However, if the advisor says they will hold custody, run. Seriously. This is how Madoff was able to pull off his Ponzi schemes. Having an independent custodian will offer superior investment protection.
In addition, another question you will want to ask is about their investment philosophy. A good financial advisor will tailor the investments to fit your needs, goals, time horizon, and risk tolerance. However, you will want to make sure their philosophy aligns with yours. For instance, if you like simple investments that you can easily understand, you won’t be a good match with an advisor who likes to move money around in complicated ways. Whatever you prefer, just make sure you understand what they will be doing with your money.
Other great questions to ask a financial advisor before hiring include:
- What specific services do they provide?
- How do they benchmark their investments?
- What is their fee structure?
- Will they coordinate and work with your CPA or accountant, and/or estate attorney?
- How you can see and track your investments?
- What type of technology do they use?
- Do they offer help with alternative investments such as real estate or digital assets?
- How often per year you will meet with them?
- What is their succession plan?
Remember, don’t be afraid to grill potential financial advisors with all your questions. Even if it feels a little uncomfortable. It is better to spend the time upfront making sure it is a good fit versus jumping in and realizing it is not.
The bottom line
Unfortunately, the financial industry is unnecessarily complicated. Because of this, it is important to exercise caution to make sure you find the best financial advisor to meet your needs. However, once you do they can truly help you gain clarity, work towards achieving your financial goals and live the life you want. So, in the end, it is totally worth it.
About Bonfire financial
Bonfire Financial is an Independent, Fee-Only, Registered Investment Advisor with a team of CFP® Professionals in Colorado Springs, CO. The goal should be for you to focus on enjoying life, not market fluctuations.
We are fiduciaries. There are no products to push and we do not get paid commissions- it’s all about what is best for you.
We invite you to schedule a complimentary consultation to see if we might be a good fit for you! Simply click the button below to schedule an appointment.