Accumulated wealth? Here's what to do next

At some point in your life, you might accumulate enough wealth where you no longer feel comfortable going alone when it comes to managing your finances and investments.

Perhaps you received an inheritance, saved $100,000 in your retirement account or earned a big bonus. Or maybe you just think it’s just time to get some help.

When that time comes, there are plenty of in-person and online financial advisers to assist you. Yet, finding the ideal person or program to help can be daunting. There are some 200,000 personal financial advisers in the U.S., according to the Labor Department’s Bureau of Labor Statistics.  And there are many automated investing services offering so-called “robo-advice.”

So where to begin?

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First, find out if your employer offers any financial planning help, says Liz Davidson, author of “What Your Financial Advisor Isn’t Telling You” and CEO of Financial Finesse, which provides workplace financial education.  Some firms provide one-on-one consultations with a financial planner as an employee benefit or through a 401(k) program, as well as other money management coaching.

“If you have a workplace financial wellness program through your employer, start there,” says Davidson.

Also, ask friends and family for recommendations, says Brian Jacobs, a certified investment management analyst and managing partner with Jacobs Strategic Consulting. “Friends and family seem to be the most trusted method for finding services in most aspects of the economy,” he says. “Certainly has been true with advisers.”

That said, knowing what type of adviser you seek is the first step, says Jacobs. “Are you seeking a holistic, multi-generational financial planner that will manage wealth and protection for your entire family or are you just seeking a money manager?” he says. “Do you need tax advice and insurance? So before asking for referrals it's good to get an understanding of your needs.”

In addition, explore the professional services offered by groups such as the Certified Financial Planner Board of Standards, the Financial Planning Association (FPA), the National Association of Personal Financial Advisors and the Garrett Financial Planning Network, all of which have searchable databases and financial education material. The FPA’s PlannerSearch publishes, among other things, articles that address financial planning for life events such as buying a home or saving for retirement.

Once you have a list of potential financial planners, interview each candidate to find the right match, advises the Certified Financial Planner Board of Standards. Typically, you can request a first face-to-face meeting for free. Ask the adviser about his or her experience, qualifications and approach to financial planning and investment management, says the CFP Board. Also, ask the tough questions: how they get compensated, if they have conflicts of interes,t and if they have had any disciplinary actions against them.  

And don’t get thrown by the letters that follow someone’s name such as CFP (certified financial planner), CFA (chartered financial analyst) or CIMA (certified investment management analyst). The Financial Industry Regulatory Authority (Finra) has a tool to decode that alphabet soup. The Finra website also has helpful information, such as details on what certification groups require continuing education, takes complaints or has a way for consumers to confirm whether the adviser does in fact have the credential after their name.  Other online resources include BrokerCheck and Investment Adviser Public Disclosure.

For those who don’t need human interaction, there are firms that offer “robo-advice,” which is low-cost online investment management services. The robo-adviser manages money based on answers to online questions on topics such as risk tolerance, investment objectives and investment time horizon. 

A robo-adviser almost always uses algorithms to allocate assets and rebalance a portfolio, while a human adviser may or may not use algorithms. With a robo-adviser, there’s typically no specific person assigned to an account who will answer questions. Some robo-advisers do offer a personal adviser services, for an extra fee.

A human adviser, by contrast, typically meets with clients in person quarterly or annually to review financial performance and goals.

The best-known automated investment firms include Betterment, Wealthfront, SigFig, Schwab Intelligent Portfolios, Liftoff, PersonalCapital, FutureAdvisor, Vanguard VPAS, Fidelity Go, and Essential Portfolios.

So how do you choose?  It depends on what kind of help you want, says Davidson.

If your assets are relatively modest and your financial planning needs are not complicated, “online may be a better fit,” she says. As your financial planning needs become more complicated, consider using an in-person financial planner or investment manager, Davidson says.

 “If you’re not sure whether advice from a real person is right for you – and your situation is not complex – start with the online tools, then consider one of the hybrid, virtual financial planning services with telephone access to a CFP,” she says. 

Davidson also points out some cases when a human planner is best, such as when an investor wants an ongoing relationship with a set financial adviser, when disagreeing partners or spouses need an unbiased financial discussion facilitator and when someone has complex investing, tax or estate-planning goals.

No matter whether you choose an online or in-person help, always ask about the service provider about performance, says Jonathan Stein, the founder and president of Betterment. Ask for the adviser’s track record as well as how the adviser plans to track your portfolio (for instance, whether they will measure it against your goals or against a benchmark such as the Standard & Poor’s 500 for your stock portfolio and Barclays Aggregate Bond Index for your bond portfolio or both) and how often they will review your investment results.

“An investor should ask to review the adviser's models, ask how long they have been using them and how have they performed in up and down markets,” adds Jacobs.

He also suggests asking: Did the models deliver the expected investment outcome? Are the models managed to minimize taxes and, if so, how? And, is there an explicit strategy to minimize taxes, often referred to as tax-loss harvesting?

Mark Cortazzo, a certified investment management analyst and senior partner with MACRO Consulting Group notes that performance is only part of an overall important conversation with any potential adviser.  "How much risk did you undertake to achieve that performance is also very important to understanding if that number is good or not," he says. 

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal, TheStreet and MarketWatch. Got questions about money? Email Bob at rpowell@allthingsretirement.com.