Intro: Understanding Financial Planner Ratings
When it comes time to make investments, few individuals jump into the market without first viewing financial advisor ratings. After all, this isn’t an area where you can afford to cut corners – you want a return on your investment and security for your future. If there was ever a time to call in a professional, this is it.
So, how do you find the advisor who is right for you? A good place to start is by looking at financial advisor rankings.
However, it’s not quite as simple as selecting the top-rated firm and writing a check. To be successful, you must pick a financial advisor who is right for you, and doing that requires a clear understanding of how financial planner ratings work and how to interpret them for your own needs.
Below, we’ll explore how financial advisor ratings work and the best search engine platforms to research financial planner ratings, as well as a few of the top-rated firms in each category.
Click any of the links below to jump directly to that section:
- Rating by Total Assets Under Management
- Rating by Client Data
- Rating by Specialized Services
- Rating by Advisor Fees
- Rating by Location
- Rating an Advisor You Already Hired
- What to Do If an Advisor Rates Poorly
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Rating by Total Assets Under Management
What it means:
Ranking financial advisors by total assets under management is a popular way to seek investment advisor ratings, but that doesn’t mean that it works for everyone. The scale is determined by the total market value of a firm’s assets, including assets that are managed on behalf of clients. While rating financial advisors this way certainly showcases wealth and provides proof of ROI, it says nothing about the quality of their services.
Image Source: Financial Advisor Ratings
Where to look:
If you’re looking for financial advisors ratings ranked by total assets under management, check out Credio. There, you can use filters to view firms with anywhere from under $5 million to over $500 billion assets under management.
Top-rated firms:
Even if you know nothing about investment, you’ve probably heard of J.P. Morgan Asset Management in New York City. With over $1.7 trillion in assets under management, it’s easy to see why! Also located in New York is Goldman Sachs, with $1 trillion in assets under management. Both companies are synonymous with wealth, so if you’re looking for proven advisors and a bit of prestige, they could be right for you.
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Rating by Client Data
What it means:
Financial advisor ratings determined by client data rank firms in accordance to average client investments. Typically, there are three categories:
- Individual – Up to $1 million
- High Net Worth – $1 to $10 million
- Ultra-High Net Worth – $10 million +
If finding a firm with a proven track record of investing the same amount of money you want to spend is a top priority, ranking financial advisors this way will be helpful.
Where to look:
Barron’s provides a breakdown of financial advisor rankings by client data via easy-to-read, yearly spreadsheets. In addition to client data, their financial advisor ratings take into account total assets under management, annual revenue generated, and quality of services.
Top-rated firms:
In 2014, the only firm to receive Barron’s perfect score of 100 was Morgan Stanley Private Wealth Management in Menlo Park, California. From individual to ultra-high net worth clients, they scored well across the board and have offices conveniently located around the world.
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Rating by Specialized Services
What it means:
If you’re looking for a specialized type of investment, you’ll want to see financial advisor ratings specific to your future goals. Some of these goals may include:
- College planning
- Employee benefit plans
- Estate planning
- Long-term care
- Retirement planning
In cases such as these, seeing financial planner ratings based on total assets under management or client data simply isn’t enough. You have to be sure that your long-term goals, whether related to business or family, are in the right hands. Ranking financial advisors by specialized services allows you to see what firms are at the top of their industry in each category.
Where to look:
At WalletHub, rating financial advisors is made easy with a variety of filters that make your search for the right partner as unique as you are. In addition to searching for specialized services, you can filter results to your location.
Top-rated firms:
The variety of possibilities here makes it impossible to nail down one top-rated firm; however, a name that will pop up again and again is Raymond James. With a mission statement that pledges to find a “plan for everything,” they’re known for guiding investors who require comprehensive, lifelong strategies.
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Rating by Advisor Fees
Image Source: Investment & Financial Advisor Ratings
What it means:
Before you consider rating financial advisors by fee, you’ll need to understand how exactly they get paid. Generally, there are two types of financial advisors:
- Broker-dealers: These advisors are salespeople, bottom line. They are paid via commission, so it’s no surprise that their main goal is to sell, sell, sell. The stocks, bonds, and other opportunities that come across their desks may be excellent sources of income for their sales position, but they may not necessarily meet your long-term needs. Viewing broker-dealer financial advisor rankings will show you who is at the top of their sales team – not who has the best quality of service. On the flip side, a good broker-dealer will be able to match client goals with their portfolio of opportunities.
- Registered Investment Advisors (RIA): These advisors do not make a commission; they make a flat fee. Whether that fee is a one-time payout, hourly, or determined by a share of assets depends on the firm. RIA financial advisor rankings will generally be made up of a mix of total assets under management and client satisfaction.
Clearly, when it comes to ranking financial advisors, cheaper isn’t always better. While broker-dealers may cost less in the short term, they also may have an agenda that is not tied to your success. If the thought of sales determining the course of your investment is a turn-off, it’s better to seek an RIA.
Where to look:
Credio provides investment advisor ratings based on types of fees. There you can narrow your search to:
- Percentage of assets
- Hourly charge
- Commission
- Performance-based fee
- Subscription fee
- Fee only
While some results on these investment advisor ratings will offer a variety of types of fees, others will be far more specific.
Top-rated firms:
Financial planners linked to banks, such as Wells Fargo Advisors, will often have a commission-based fee. If you’re looking for proven fiduciary duty by way of percentage of assets and hourly fees, a smaller firm might be the right choice for you. In that case, seek financial advisor ratings based on location, as detailed below.
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Rating by Location
What it means:
Nearly any business transaction can be handled digitally these days, but when it comes to your money, there’s something to be said for sitting down with an advisor face-to-face. Financial planner ratings based on location will give you an idea of the best of the best in your local area – and don’t forget to apply other filters for ranking financial advisors as needed, too! Credio and WalletHub both provide the option to limit your search by city, state, or zip code.
On the other hand, maybe you are more comfortable taking risks – or simply don’t have the time to sit down and meet with investors. If you’re looking to make quick, online investments without the hassle of looking through financial advisors ratings, there are two industry leaders to explore: Vanguard and Scottrade. While Scottrade is a good place to start for first time investors, Vanguard offers personal services that can help you grow to the next level.
Where to look:
A comprehensive list of financial advisor rankings via location can be found on our site for the United States, Canada, and the U.K.
Top-rated firms:
These will depend on where you where you call home.
Rating an Advisor You Already Hired
What if you already have a financial advisor? Is there a way to rank them?
Rating financial advisors that are already managing your investment portfolio is made simple with AdvisorRater. There, you can measure your investment accounts and advisor fees against ROI performance. The free, easy-to-read graph AdvisorRater provides is a good indicator of whether or not your advisor’s fees are paying off.
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What to Do If an Advisor Rates Poorly
If viewing this information on financial advisor ratings has convinced you that you’re not getting the most bang for your buck with your current financial planner, there are a few steps you can take to get back on a path to success.
1. Hire an independent contractor to review your accounts. You don’t need to share this with your current advisor or spend a lot of time reviewing contracted financial advisors’ ratings. Visit LinkedIn to find a contractor, taking special care to read their client reviews. You might even find someone within your own network! Since this isn’t going to be a long-term or expensive relationship, concentrate on finding an individual who is trustworthy and detail-orientated.
2. Readjust your benchmark goals. If your current financial advisor’s ratings are poor, there is a chance that your benchmark goals were unrealistic. Request a meeting with your advisor and ask them to provide you with market research. If there isn’t a proven reason that your goals are failing to be met, it could be time to find a new partner.
3. Double check for fiduciary. When you chose your current advisor, did you consider financial advisor rankings based on fiduciary? Perhaps there is a hidden commission statement in your contract or another relationship, business or personal, affecting your advisor’s agenda. If you’re suspicious, hire a third-party contractor to help you get to the bottom of it.
4. Double check their credentials. Did you actually call their references? Talk to anyone else at their company? It’s not paranoia – scams happen all the time, especially in the online finance world.
5. Figure out what means the most to you. Investment advisor ratings go a long way in helping you pick the right firm or individual to work with, but they can only do so much. In order to be truly successful, you must have a big picture approach to your investments. That’s not to say you can’t splurge on that vacation you always wanted or get a new car, but investing is not about pleasure in the moment. It’s about making sure your finances, loved ones, and businesses are set up for success in the long-term.
So, what’s most important to you? Is it investing venture capital in new and exciting technologies? Setting up college funds for your kids or grandkids? Preparing for a fun-filled retirement with the love of your life? That’s for you to decide, but whatever the answer, there is the right financial planner out there for you – as long as you use financial advisor rankings to your advantage!
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