Marketwatch contributor Mark Hurley recently wrote an article castigating the financial media for producing what he calls misleading lists of the “best” financial advisors.

According to Hurley, more than half of firms included in a typical “best wealth managers” list are small, unprofitable and unsustainable organizations that are unlikely to be around for the long term.

Generally, the lists rely on one impressive-sounding, but largely meaningless, metric: assets under management (“AUM”). In other words, when you examine the lists, they are in reality no more than a ranking based on how much money each firm has under management. AUM tells you little about a firm’s expertise, credentials and experience of its key people. It also tells you nothing about how the firm gets paid for its advice. More importantly, AUM says nothing about how likely it is that a firm will be in business for the next five years, much less the next twenty. Problematic if you need advice for the long term.

So if AUM is at best worthless, and at worst misleading, why do so many publications use it as their key selection criterion? Because it is easy to get this information. Every advisor is required to disclose AUM, and there are numerous data services that track it.

Hurley presents some alternative questions to ask when vetting a financial advisor, including:

Is the firm fee-only?
Understanding how your advisor gets paid can be very helpful. A “fee-only” advisor’s sole compensation is the fee directly paid by the client. There is no compensation from financial services companies to sell their products. So the only incentive is to get the best returns for clients.

And don’t be confused by the industry’s misleading term “fee-based” – it’s not the same as fee-only. Fee-based just means that the advisor collects both fees and commissions as well as kickbacks from products in which a client’s money is invested.

Will this firm be around for the long term?
How broadly is the advisory firm’s ownership held? If all of a firm’s ownership is in the hands of a few older partners, ask if it will be in business after they retire. Well-run, sustainable wealth management firms have multiple owners across different generations.

How much expertise do its employees have?
The smartest people at successful advisory firms are not the founders but, rather, the young people the founders have recruited to be their successors. These younger staff should have professional designations such as a CFP or a CFA, and at least five or ten years of experience. In all likelihood, they are the people who clients will rely on for advice twenty years from now.

You can read the entire September 23, 2014 Marketwatch article here.