Financial Advisors in Orange County: What You Need To Know Before Getting Started
One way to have money later is to invest money today. Investing often means that sooner or later, you'll likely want to find an investment advisor who can help you put your money where it can grow.
Choosing a financial advisor may be one of the most important decisions you'll make. Your retirement, children's education, and your financial future may depend on it.
What do you need to know to find the right financial advisor in Orange County?
Let's take a look:
Look for an Advisor with Respectable Credentials
Financial advisors can hold one or more of 100 credentials. Of these 100+ credentials, there are three we would generally recommend you look for.
Certified Financial Planner (CFP): A CFP® professional has completed 18-24 months of study, passed a rigorous exam, and spent at least three years working in the field.
Certified Public Accountant (CPA): A CPA holds a minimum of a bachelor's degree in accounting, has passed a 14-hour exam, and holds a minimum of 1-2 years of experience.
Chartered Financial Analyst (CFA): A CFA has a bachelor's degree and three years of experience. They have also passed three rigorous exams in financial principles, accounting, and financial management.
An advisor does not need to hold all three of these credentials, and in fact, very few people will hold more than one.
Understand How this Advisor Gets Paid
Financial advisors usually get paid in one of three ways:
Commission Only: A commission-only advisor charges a commission from the money you invest up front. Let's say you invest $5,000, and your advisor takes a 5% commission. Their portion is $250, and the remaining $4,750 goes into the account. Generally, a reasonable commission would fall between 3% and 6%.
Fee Only: Usually an independent firm , fee-only advisors charge an hourly fee, a flat fee, or a retainer. These fees are not tied to the amount you invest. Common hourly fees range from $120 to $300. Our firm, Cooke Wealth Management, is a fee-only service.
Fee Based: Fee-based advisors combine the two. They will generally charge something like an hourly fee for the time they spend working with you, and a commission for the money they invest.
Discover How This Advisor Determines success
Financial advisors can determine their success in a number of ways. Most often an advisor might use one of these methods:
Assets Under Management (AUM): Traditionally, advisors use this metric to determine their firm's success.. AUM remains a popular tool to show asset growth.
Average Revenue Per Client (ARPC): Measuring top-line revenue, ARPC reveals profit margin over time. A high ARPC may indicate a healthy firm, or it may just mean the company takes on a small number of high net worth clients.
Net Profit Margin: To get net profit, divide net income by total sales and multiply the product by 100. This number often reveals a firm's efficiency.
Client Success Stories: a more subjective measure, but important nonetheless. It’s a good idea to talk to potential financial advisors and ask them about the ways in which they helped their existing clients succeed and achieve their goals, especially those clients of theirs with similar goals to your own.
These metrics might be used to assess if a firm is making money for its clients, has experience serving investors in your income bracket, and can manage its own income profitably.
Choose an Advisor Who Shares Your Personal Values
Your advisor's values should align with your own. Ask yourself: Do they charge a fair rate? Do they follow industry standards? Do they share my philosophy of investing?
At Cooke Wealth Management, we hold a Biblical perspective on investing. Our wealth management advisors are Certified Kingdom Advisors (CKA). As CKAs, our goal is to integrate our wealth management and business practices with our Christian faith.
We aspire to treat everyone with respect, operate with integrity, and apply wisdom to our decisions. Most of all, we believe that apart from Jesus Christ, we can do nothing of lasting value.
Search for References, and Ask for Their Retention Rate
People you know are a good place to start your search. Ask your family or friends to refer you to an investment manager.
Once you have a list of names, a simple Google query can reveal a lot. What kind of reviews have clients left on Google or Facebook? What do former employees say on GlassDoor?
It can be tricky asking an advisor for a list of references since confidentiality comes into play. However, an advisor can often get back to you with this information after they’ve asked the individual for permission. Additionally, you can ask for their retention rate. What percent of their clients stay one year? Five years? A decade?
Low turnover probably indicates satisfied clients.
Learn How to Spot Fraudulent Financial Advisors
Most financial advisors are honest people who work hard to help their clients meet their long-term financial goals. Some wealth managers, however, give the rest of us a bad name.
You don't have to get caught in a financial scandal, though. Scams might be easy to spot if you know the common signs:
Unscrupulous advisors often target a single affinity group. Scam artists rely on a built-in level of trust that comes with membership. They solicit most or all of their clients from the same club, church, or ethnic community.
Unsavory advisors may misrepresent their credentials. If someone has a CPA, CFA, or CFP designation after their name, just double-check their license or certification with the relevant agency.
Scammers promise unrealistic returns. Over the last 85 years, the stock market has averaged a 9.5% rate of return annually. If your advisor is suggesting you'll earn more than 12-15%, you could be getting groomed.
Check Your Gut
Many Americans today are living into their nineties and beyond. You may work with this advisor for a long time to come. Do you like this person? More importantly, do you trust them?
The best investment managers take the time to teach you about your options so you can make good choices for your family and your future.
How to Find a Financial Advisor in Orange County
If you're looking for a financial advisor in Orange County, we'd love to talk with you about your financial goals. You can give us a call at 949.724.3880 or schedule a discovery session today using the form on our site.