How to find a good financial advisor according to Kent Smetters - an economics professor at the University of Pennsylvania's Wharton School.
According to Smetters, finding a good financial advisor involves two key steps:
- First, only choose a fee-only advisor. "Don't be fooled by the expression "fee based" — that's a wolf in a sheep's clothing. The word "only" is critical. By law, a "fee-only" adviser must place your interests first and not accept hidden commissions from mutual funds, insurance companies, or anyone else. Such commissions create incentives for advisers to steer you into higher-cost investments that can radically reduce your account balances over time."
- Second, you want an advisor who believes in low-cost passive-indexed diversification. "Keeping costs low is critical for creating wealth over time. And by buying an index of stocks, say the S&P 500, you can very cheaply just "ride the market" up over time. The evidence is very clear that even skilled investment managers who try to "beat the market" generally can't do it. In other words, paying people to pick stocks for you usually means you pay higher fees and make less money."
I'm pleased to say that Longview Advisors fits his criteria and is also a member of the National Association of Personal Financial Advisors (NAPFA), whom he mentions in the article.
You can the full article here: Finding A Good Financial Adviser Without Paying Too Much