How to choose a financial advisor

Hiring a financial advisor has multiple benefits no matter where you are in your career.

You may want to seek expert advice on tax and investment options, or you may be looking for some budgeting tips to save for your dream vacation. There really is no limit to the knowledge a financial expert can impart.

To begin, you’ll want to narrow down your specific financial goals. This way you are less likely to pay for the services you need. A financial advisor can better guide you on which investments are worth pursuing and which ones are worth avoiding, for example. You can now easily start exploring your options using the table below

How to find a financial advisor

Many professional associations have large directories. For example, the National Association for Personal Financial Advisors lists fee-only, fiduciary planners. The Financial Planning Association Also offers a directory you can browse.

You can ask friends, relatives or people in your professional network for recommendations and then do some extra legwork.

There are also several online resources for those looking for quick answers.

To make sure you’re getting the best bang for your buck, check industry associations and their criteria. Many financial advisors, such as a Certified Financial Planner (CFP) or a Chartered Financial Analyst (CFA), must pass an exam or meet certain criteria to be admitted to their professional association or group. You can also check them through various services, including the Financial Industry Regulatory Authority (FINRA). brokercheck.

What kind of financial advisor do you need?

There are seemingly endless titles associated with financial professionals with a variety of skills. FINRA, a US government-supervised nonprofit, offers a directory of professional terms that can help you understand the various titles – and their authenticity. Also the US Securities and Exchange Commission Offers an investment glossary.

Here are some common titles:

• Finance Advisor: Often a broad term that includes advice on securities (stock and bond) brokers, money managers, insurance agents, tax professionals and even bankers.
• Certified Financial Planner (CFP): Usually examines your overall financial picture and comes up with a plan to meet your long-term financial goals.
• Chartered Financial Analyst (CFA): Pass a three-part exam on investment tools, asset valuation, investment portfolio management and planning.
• Registered Investment Advisor (RIA): Provides investment advice on securities including bonds, exchange-traded funds (ETFs), mutual funds, stocks and other investment products. RIAs register with the SEC or state securities regulators.
• Asset Manager: Provides wealth management and financial services to wealthy clients, generally defined as having more than $1 million in readily accessible, or liquid, assets.

Start exploring your investment options using the table below now.

What Credentials Should a Financial Advisor Have?

Before you officially begin the process of hiring a financial advisor, you’ll want to carefully check their credentials to make sure they’re the right fit. The best way to start your research (other than searching the Internet) is to check with your potential advisor Affiliated Societies And what certification is required.

You can also see the directories here:

• FINRA’s BrokerCheck website or by calling FINRA’s hotline at 1-800-289-9999
• Find any formal actions against individuals using the SEC’s Investment Adviser Public Disclosure (IAPD) website or the SEC Action Lookup Tool
• Your state securities regulator

Trusted vs. Non-Trusted Financial Advisors

Advisers who follow the fiduciary standard — also known as a fiduciary duty — act in the client’s interest first, even if their own compensation suffers. In recent years, federal agencies have strengthened rules for many financial professionals to include these standards, including broker-dealers.

Certified financial planners (CFPs), for example, “must put the client’s interests before their own,” says James Lee, president of Saratoga Springs, New York-based Lee Investment Management and president-elect of the FPA. Registered investment advisers must be “committed to a fiduciary standard under the law,” Lee explained.

Questions to Ask a Financial Advisor

To find a financial advisor that meets your needs and expectations, you’ll want to make sure you’re asking the right questions. When scheduling a meeting with a potential advisor, make sure you come prepared. Experts recommend having a solid list of questions, including:

• What services do you provide?
• What type of clients do you work with the most?
• How much time do you usually spend with them and how do you meet (in person, Zoom, phone, etc.)?
• How often do you communicate with clients and how (email, call, paper mail, etc.)?
• Are you a believer?
• How will you get paid, and how much will I be charged?
• What services will be included in my bill?
• What is your certification or credentials?
• What is the average cost of your service?
• Which professional group do you belong to?

How much does a financial advisor cost?

The type of fee you pay depends on the type of advice – and the advisor – you hire

Three common payment structures are:

• Fee only: Advisors work by charging fixed fees. According to the Kitses Report on Advisory Pricing, an individual financial plan in 2020 ranges from roughly $1,800 to $2,500. Some fee-only advisors may also charge by the hour.
• Commission: When you buy a financial product the advisor takes a fixed amount or percentage when the advisor instructs you.
• Percentage of Assets Under Management (AUM): The broker or advisor takes a percentage, usually around 1%, of the total assets under management. So for $100,000 in assets, the advisor would charge $1,000.

How to resolve disputes with your financial advisor

You can usually file a complaint with a regulatory agency that oversees the type of professional you used. SEC or state regulators oversee financial advisers, while FINRA Regulates brokers. You can also complain to an adviser’s relevant professional association.