Finding the right Christian financial advisor is a very personal choice, and may seem overwhelming. It is important to find someone who is not only knowledgeable, skilled and shares your worldview, but also someone you trust.
With so many potential advisors to choose from, how can you select one who will be a good fit? By doing a little bit of homework ahead of time, asking good questions when you meet/talk with the advisor and trusting your instincts.
Where to Start?
I would encourage you to start your search by creating a list of three potential advisors. There is nothing magical about the number, but it should provide a variety of options to consider (without becoming too overwhelming).
If you don’t have three different advisors in mind, you can ask friends/family for a recommendation. Or you can look at an organization like Kingdom Advisors, which is a community of Christian financial advisors all over the US who are trained in stewardship issues (I will explain a little more about them later).
No matter what way you find the names, it’s time to roll up our sleeves and get to work.
Before you call/meet: Research their background
This is a very important step, and it can get confusing very quickly (so I’ll try and keep it as simple as possible). Besides checking out their website, you should look them up in an industry database. There are two types of advisors in the US, so there are two different databases that you may need to search.
The first type of advisors are brokers, who work for broker dealers. These advisors are overseen by a government authorized non-profit called the Financial Industry Regulatory Authority (FINRA). FINRA’s BrokerCheck is the first website to check, particularly if you are unsure if they are a broker or not.
If they do not appear in that website, then they are the second type of advisor called an investment advisor representative. These advisors work for a Registered Investment Adviser (RIA) and are overseen by either the US Securities Exchange Commission’s (SEC), which is a US government agency, or their individual state agency. The SEC provides the Investment Adviser Public Disclosure (IAPD) database with information on these types of advisors.
Some advisors are listed in both databases, because they can serve as both a broker or investment adviser representative.
With either database, look up the advisor first and then their firm and see what you find. There are two main areas of concern:
A bankruptcy would be troubling as they should be running their personal finances well (like they will hopefully help you do), so this is a red flag. There are times that a bankruptcy is due to an extenuating circumstance (such as a spouse or child becoming very ill), so you will want to ask the advisor about this when you call/meet.
Complaint or Disciplinary Action
A complaint/disciplinary action may show questionable practices towards clients or their employer. Though a client can file a complaint for any reason and it would appear here, it may or may not be a legitimate complaint. You will want to make notes about the complaint and ask questions about it. But, if there are several complaints, that raises a red flag right away.
If one or both of these items shows up, and you don’t feel comfortable speaking with them, keep looking.
Assuming there are no red flags, set a time to call/meet with each advisor and ask them each the same questions. Most advisors will not charge for an initial call/meeting (but be sure to ask if there is a charge just in case) as it allows both sides to determine if it is a good fit. Here are five important questions to ask them:
1. How does your Christian faith impact your business?
There are two different types of Christian financial advisors. The first are those who are believers, who may or may not apply Biblical wisdom to client situations, and are particularly focused on the secular market.
The second, are those who apply Biblical wisdom to a client’s situation as the focus of their practice, and primarily work with Christians. This type of financial advisor will generally be more focused on helping their clients be better stewards of what God has entrusted to them.
Additionally, I would encourage you to ask them about their testimony and ministries they serve in to get a better feel for who they are.
2. Are you a Fiduciary at all times?
A fiduciary is a legal requirement for a financial advisor to put your interests above the advisor’s. This would seem logical, but many advisors are not required to do so, or only at certain times. An advisor should be able to provide you written documentation of when they are a fiduciary.
Though most advisors will put your interests before their own regardless of their fiduciary status, an advisor who is a fiduciary at all times has agreed to be held accountable to a higher standard. If you have the choice to work with an advisor who only sometimes has to put your interest before their own, or one who is legally required to put your interests above their own all the time, which would you prefer?
3. How are you paid?
You will hear a few terms when you ask about compensation:
- Fee Only – They either charge an hourly fee, project fee, retainer and/or a flat percentage on the assets they manage, but receive no commissions.
- Fee Based – they receive fees (see above) and commissions (usually from the sale of insurance products, but there could be other sources of commission they receive as well)
- Commission – they only receive a commission on what they sell their clients
Though some advisors will tell you that their method of compensation is the only transparent one, the reality is they all have their shortcomings. There is no right way to charge a client that takes away all conflicts of interest for the advisor. The underlying issue is the integrity of the advisor.
At the very least, they should be able to tell you how much you would be charged to work with them, in a way you can understand clearly. If they can’t provide that in writing, you should keep looking.
4. Do you provide investment management and/or financial planning?
Most advisors will provide some form of both of these services.
- Investment management is where they help you determine your ability to take risk, when you will need a certain amount of income etc and create a mix of investments to work towards meeting your investment goals. Do they provide investments that align with your faith?
- Financial planning can take many forms, but in its most broad reaching application, will look at your entire financial picture (from your debt, insurance, cash flow, estate plan etc) and help you develop a plan to meet your financial goals.
Finding an advisor who handles both, will help you develop and put in place a plan to align your investments to support your goals. They will also advise you on course corrections when your life circumstances or government regulations change to keep you on track.
5. What is your education background and/or designations?
Having a college degree in financial services is not that common, though amongst younger advisors it is becoming more so. Many advisors started in another career or before there was a defined college major, so this is a more difficult one to assess. If they have been in the industry for more than a few years (ideally through at least one down market), that means they may be knowledgeable, but you may need to look more at their designations.
Designations are the alphabet soup after their name. The advisor has earned these designations, either through acquiring knowledge and passing a test, and/or by paying a fee.
Two designations that are helpful to look for are the CFP® and CKA®. The CFP®, or CERTIFIED FINANCIAL PLANNER™ designation has become the designation that the industry is slowly coalescing behind to provide an advisor the core knowledge for the job. If someone is a CFP®, they are now required to act as a fiduciary at all times (though this is not a legal requirement). Be sure to look them up in the CFP Database to ensure they are still an active certificant.
The CKA® or Certified Kingdom Advisor® is a designation designed to equip Christian financial advisors with how to apply Biblical wisdom to their client’s financial situations. It shows that the advisor has taken some sort of formalized training in working with stewardship issues. This designation is sponsored by Kingdom Advisors, and they have some good resources on their website.
Having one or both of these designations doesn’t mean that they are a good advisor. But, it does show the advisor has an interest in gaining the knowledge necessary to work with clients and are willing to be held accountable by an independent organization.
If they have more letters after their name, you can look them up in the FINRA Professional Designation list that outlines what is required to earn each designation, who accredits it etc.
After you have interviewed all three Christian financial advisors and compared their answers, here are a few final points to consider:
- Though you may choose to use a financial advisor to help you with financial matters, it is still your responsibility before the Lord to manage what God has given you. You can outsource the tasks, but ultimately the responsibility is yours. So, choose an advisor well and don’t blindly turn over the reins to them.
- The Bible clearly lays out financial principles to follow, but leaves how we apply them up to us. Having an advisor who will challenge your views on stewardship and help you wrestle with the practical ramifications of your decisions, can help you align your finances with your faith.
- As you go through this process, does the prospective advisor speak in a way that you can understand? You do not need to understand every detail, but if he/she is talking over your head, you would be best served working with someone who can clearly communicate with you.
- Remember, no advisor is perfect, so you need to determine when to extend grace to them or not. People do business with those they like and trust. So pray about it, do your research and trust your instincts.