Just like we turn to medical professionals for advice on our physical well-being, our financial well-being deserves the same – professional advice. Overwhelming evidence in support of this idea is what happened to the millions of people who have lost significant shares of their retirement savings in the recent market crash which left them financially devastated. This situation would be impossible if all those people had decent financial advisors and listened to their advice.

The problem is that many of them did have advisors, but those advisors failed to do what they are told to do in their textbooks. Investors who are close to retirements simply shouldn’t be invested in volatile assets, and advisors know it. Why don’t they advise their clients accordingly? There are few reasons, and we are going to look at them in order to answer a different question – how to find a good financial advisor, rather than whether you should have one.

There are two major groups of people who call themselves financial advisors (or consultants or planners). The first group is very small, almost non-existent, and includes advisors who charge fees for their advice on a per hour basis. Advisors in the second and the largest group don’t charge their clients for advice and are compensated by insurance companies, mutual funds and banks on a commission basis. These people, and I happen to be one of them, are not really financial advisors in a strict sense. They are simply brokers or salespeople. The problem with this compensation model is that it is based on an inherent conflict of interest. A broker is financially motivated to recommend an investment or an insurance policy which will pay the highest commission rather than what is truly best for the client.

The best way to be absolutely sure that you are getting unbiased advice is to pay for it. But if you have a hard time paying for what you can get for free, here are some qualities to look for in a potential advisor. A professional designation, such as CFP, CLU or ChFC is hard to get, while anybody who speaks English can easily pass a test for a mutual fund or a life insurance license without any preparation and call himself a financial advisor. Look for advisors with a recognized designation. Also, look for an advisor who asks you many questions and tries to understand not only your situation, but also your motivation, your personality and your values, rather than one who jumps right into recommendations and pumps specific products. A good advisor understands the long term benefits of giving the best advice possible vs. immediate gain. When an advisor understands your situation and gives you a recommendation, make sure you are given several alternatives with pros and cons of each, rather than only one.

Finding a good advisor is not easy, but it can be done. The worst decision you can make is to put this task away and take care of your finances on your own. The consequences can be devastating.

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.