I’m often asked how an investor can find a great financial advisor. I’ve interviewed hundreds of financial advisors over the years, and in a media interview most of them sound pretty knowledgeable. Well, at least they’re quotable for a television news report or in a newspaper column.

But when it comes to your own hard-earned dollars, the trick is to find someone who actually knows something. I recently went to a financial advisor who looked at our family portfolio and encouraged us to sell some of our smaller holdings — you know, the stocks you pick up here or there because you like the concept or something you read about them.

We sold a bunch of these just before this last drop in the stock market. I suppose it was a good thing, since we lost less than if we had held on to everything. Of course, now we have too much money in cash. But the important thing is that the advisor we spoke to was right — we did have too many stocks to follow all at the same time (he recommends holding no more than 20 to 25 companies).

But even after meeting twice with this financial advisor, I still don’t know if he’s the right one for us. Which gets me back to you. How can you find someone who can really help you?

First, make sure the person you hire has the right qualifications: You’d want to hire someone with some of the right letters after his or her name: CFP (certified financial planner); RIA (registered investment advisor), CFA (chartered financial analysts), or CPA/PFS (certified public accountants/personal financial specialists). Once you know his or her qualifications, find out how long the financial planner has been in the business. Try to speak to several current clients about their working relationship with this individual.

Next, if you’re using a broker at a brokerage firm, you’ll want to check for any problems at the National Association of Securities Dealers (www.finra.org/index.htm).

The biggest problem investors have with financial planners is how they get paid. Most so-called financial planners are actually commission-based sales people who get fat checks every time they sign you up for an annuity (which is worthless for almost everyone, by the way). So what happens? People go to a financial planner who then sells them an expensive annuity. Or something else equally useless and expensive but pays a fat commission check.

What you want is to hire someone who knows something, who doesn’t have a disciplinary problem, and who charges you a flat fee in order to help you manage your money. “Fee Only” might mean charging you by the hour, charging you a flat fee, or charging you a flat percentage of the money under management, such as 1 percent up to $1 million and .5 percent thereafter.

To find a FEE ONLY financial planner, check out www.feeonly.org, or www.garrettplanningnetwork.com.

And good luck managing your money.

June 1, 2006.