On average, people who work with a financial adviser do better financially than those who don’t. While this is a true statement, we should really understand what it means before running out to find one.

Saying people who work with a financial adviser “do better” implies something that we can’t know to be true — that they do better because they work with a financial adviser. It implies a causal relationship.

But it could be that people who use a financial adviser are really interested in and working at doing the best they can financially. They might do better than others even if they didn’t use a financial adviser, just because of the type of people they are.

The truth is probably somewhere in the middle. People who use financial advisers are most likely trying to do the best for themselves. They are also most likely receptive to advice.

If you are trying to do the best you can financially and are receptive to advice on how to do so, then working with a financial adviser could be a great option.

What Is a Financial Adviser?

Unfortunately, there is no universally accepted definition. Insurance agents, stockbrokers, other investment salespeople all claim this title. A true financial adviser is in the business of providing advice and direction. Managing investments or insurances may, or may not, be a part of that. But that can simply be done yourself with the help of Blooom or Personal Capital.

A true financial adviser offers comprehensive services. Changes in one area of your financial life affect other areas. You need to know this. They may specialize in one area, such as retirement planning or education planning. But they really need to address all areas.

Does an Adviser Have to Be a Fiduciary?

Let’s begin by understanding the two basic types of financial advisers. One type is a fiduciary, who is legally required to put your best interests first. The other type is held to a suitability standard. This means that their recommendations must be suitable for your situation.

Fiduciaries claim that this is a lower standard (true), which means that suitability-standard advisers will put commissions before your interests. Two things will help put this into perspective:

The fiduciary standard is the same standard to which lawyers are held. As we can see, this works splendidly to prevent any form of inappropriate behavior. Just kidding.

They are fiduciaries, so they are legally required to work in your best interest. You can decide for yourself how much comfort you wish to draw from this.

People are people whether they are fiduciaries or not. Many suitability-standard advisers put their clients’ interest first. Many in both camps charge their clients based on a percentage of assets under management.

Unfortunately, there are some bad apples in the business. Working with a fiduciary may provide you with some additional comfort. But if you work with a bad person it won’t really make much difference who stole your money.

Commission vs. Fee-Only

Generally, fee-only advisers are fiduciaries, while commission-based advisers aren’t. Even when you work with a fee-only adviser you will have to invest to reach your goals. And the investments will have fees. There’s still no free lunch.

The smart thing is to understand exactly what you are paying and what you are getting. Sure, it’s work. But it is work either way.

Are Designations Important?

Important, yes. Essential, not so much. For example, the Certified Financial Planner (CFP) designation shows a level of commitment. CFPs have studied a lot and have passed some pretty rigorous exams.

There are many other designations, some fairly rigorous, others less so. The bottom line is that the vast majority of CFPs are technically competent and receive ongoing training — all good stuff. They have committed to ethical standards.

But a designation does not guarantee you get great or even good advice. Many people without designations provide outstanding advice day in and day out. The designation shows you they meet a high standard for knowledge. That’s a plus, but also shouldn’t be a deal breaker.

The Greatest Predictor

The greatest predictor of a successful relationship with a financial adviser is how you find one. If you were referred to one by someone who is financially successful, has your trust and respect, and has worked with that adviser for a decent period, your chances of success are quite good. But there are still some things to check.

Check Your Adviser’s History

There are a couple of ways to check your financial adviser’s disciplinary history, and you should. It doesn’t mean you shouldn’t proceed because someone with 20 years in the business had one complaint filed some time ago.

But someone with eight complaints — there seems to be a pattern here. They could be a fine individual with bad luck. But don’t be the one to test that theory.

How to Find a Financial Adviser to Suit You. Finding someone who cares about your money as much as you do is tough. We’ve got the lowdown on the best financial adviser for you. #financialadviser #financialiteracy #financialplanningYou can check on CFP Board disciplinary records here. You should also look up the individual on FINRA’s BrokerCheck. And see what you can find on your state’s regulatory website. These resources, however, are limited.

Break out your awesome search skills and see what else you can dig up. You may find the individual has a history of activities that make you question their moral standing, even though a formal complaint has never been filed.

It’s Really About the Person

Once you are down to one or two candidates, you need to meet them. You may be looking for guidance on a single, pressing issue. More often, people are looking for a long-term relationship with a trusted adviser.

You need to know how they work, how often they will meet with you, what you should expect. If they know nothing about you and are talking about the returns they can get for you, excuse yourself immediately. Go elsewhere.

Final Thoughts

Remember, when things seem too good to be true they usually are. When people assure you of things that are too good to be true they are probably lying.

The people who get the most from a relationship with a financial adviser are those who get comprehensive advice. When was the last time someone who isn’t selling you homeowner’s or auto insurance really explained what your coverage does — and where you are over-covered and over-premium? There is a lot of value in having a knowledgeable and trustworthy person review all of your financial matters.

Not everyone needs or wants a comprehensive financial adviser. A good adviser is invaluable for those who don’t have the time or interest to do it themselves.

And for those who don’t even like dealing with finances, a good adviser will help organize your financial life. Then you meet with them periodically for a report on how you’re doing. For many, that’s true financial peace of mind.