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In times of uncertainty – turbulent markets, high inflation, geopolitical turmoil – we often write about what financial advisors recommend to clients.
This advice often boils down to “keep calm” and “don’t let short-term news lead to impulsive moves that have long-term consequences.” Many advisors also point out that clients who already have a plan in place need to trust it and stay the course.
Which leads to the next consideration for some readers. No idea? It might be time to make one.
More than FA100
FA 100: CNBC Ranks Top-Rated Financial Advisory Firms in 2022
Here’s how we determine the FA 100 rankings for 2022
CNBC’s #1 financial adviser agrees with Warren Buffett: ‘He likes cash flow’
Helping consumers make smart financial decisions is a key part of what CNBC’s personal finance team does, and that includes determining when to seek help and from whom.
That mission was a big driver behind the CNBC FA 100 list, now in its fourth year. The list is based on a proprietary methodology developed by CNBC in partnership with data provider AccuPoint Solutions. The process begins with data pulled from SEC filings for a list of 39,818 registered investment advisory firms, which is whittled down to the last 100. (See the full methodology here.)
The top-ranked advisers on the CNBC list average 30 years of experience and collectively have more than $300 billion in assets under management.
But that’s not the only — or even the main — factor as to why they made the list.
The CNBC FA 100 recognizes the consulting firms that best help people navigate their financial lives. We consider the services offered by the companies and their specialties, among other factors. And for the first time this year, we took into account the number of certified financial planners a company employs, recognizing the expertise the designation brings to planning offerings.
Working with an advisor has financial benefits
The pandemic has spurred consumer interest in working with a financial advisor. Nearly one in five adults, 18%, who did not have an advisor before the Covid-19 pandemic say they have now started working with an advisor or plan to do so, according to the Northwestern Mutual Planning & Progress study Study of 2022.
Of the 2,381 survey respondents, 35% work with an advisor.
Respondents who have a financial advisor reported greater confidence in their ability to handle financial issues, including managing debt, planning for retirement, and achieving long-term financial security. They were also more likely than those without an advisor to have accumulated savings during the pandemic.
Yet reports indicate that many consumers do not consider an advisor their first choice for financial assistance. A recent survey by advisor technology platform intelliflo found that 59% of respondents want financial advice but don’t know where to get it. Those numbers climb to 71% for Gen Z and 72% for Millennials. (The firm surveyed 2,067 adults.)
Many of these consumers ultimately turn to family, friends or digital resources for answers. About a third, or 32%, use a registered investment adviser.
Beyond awareness, concerns about cost come into play. At this point, 35% of respondents in the smartflo survey said they don’t think they have enough money to hire a financial advisor.
Don’t believe this myth: financial advice isn’t just for the rich. Additionally, consulting firms are not one size fits all, and many do not require clients to come with large assets to invest.
How and how much you pay for financial advice can also vary greatly depending on the advisor and the scope of services. You could pay a management fee based on the assets you ask an advisor to manage, for example, or a fixed monthly, annual or project-based fee. Others offer hourly rates.
10 questions to ask a potential financial advisor
If you are looking for financial assistance, we hope CNBC’s FA 100 can be a resource in your search. The ranking is intended to be used as a starting point for investors seeking an advisor. We hope this list will help you narrow your search. If you are looking for an advisor with a particular specialty or experience, search on sites such as XY Planning Network and FPA PlannerSearch.
Expect to interview with multiple advisors as you search for someone you can trust who seems like the right fit for your life and financial needs.
The CFP Board recommends asking potential advisors these 10 questions:
- What are your qualifications and references?
- What services do you offer?
- Will you have a fiduciary duty to me?
- What is your approach to financial planning?
- What types of clients do you typically work with?
- Will you be the only advisor working with me?
- How will I pay for your services?
- How much do you usually charge?
- Do others stand to gain from the financial advice you give me?
- Have you ever been publicly sanctioned for illegal or unethical actions in your career?
Don’t take their word for it on that last question. You can view an advisor’s record on BrokerCheck and with the SEC, and verify CFP certification with the CFP Board.
It may also be a good idea to ask if the advisor can provide client references.
Tune in to CNBC”half time report″ at 12 p.m. ET today to see Woodley Farra Manion’s George Farra, who earned the No. 1 spot on the CNBC FA 100 list for the first time this year.