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How to Choose a Financial Advisor


June 23, 2021 ( Newswire)

Who is a Financial Advisor?

Financial advisors are the ones who help people manage their money and reach financial goals. They provide a wide range of financial planning services, beginning from investing, budgeting, and estate planning. So, do you need any kind of help trying to manage your money? If you are like a lot of other Americans, you could use that help. Did you know that a lack of personal finance knowledge costs the average American twelve hundred dollars a year? Well, if you find a financial advisor, you can most probably avoid this cost and focus on your ultimate goal.

What are the Different Types of Financial Advisors you Can Find?

Fee-Only Advisors - They earn money from the fees you pay for their service. These fees can be charged in percent of the assets they manage for you, or it can be on an hourly basis at a flat rate. They choose to work under a fee-only module to reduce the potential conflicts of interest. As their income is from clients, they make it a point to end up with financial plans and products that would work the best for you.

Commissioned Advisors - Some financial advisors make money by earning sales commissions from third parties. Some of these advisors may advertise themselves as free advisors that do not charge you a fee for advice, and others may charge you a fee, which means they would only obtain a part of their income from the third parties or the commissions that they charge to help you invest in your desired investment avenue.

Registered Investment Advisors - Registered investment advisors are companies that provide financial advice. They employ investment advisors who are bound by fiduciary duty, and they can have more than a hundred of these representatives working for it. They may be fee-only or fee-based. Some may even have the additional credentials. Because of their expertise, they are known to be well suited to help you plan every aspect of your financial life.

Robo-Advisors - They offer low-cost and automated advice. They specialize in helping people invest for their mid-term and long-term goals, more like retirement, with preconstructed diversified portfolios of ETFs. They would not really match people with complex financial needs though. If you are someone with complex financial needs, you might want to choose a conventional financial advisor.

How to Choose a Financial Advisor?

1. Decide where you Need Financial Help:

Before you can go ahead and speak to a firm or an advisor, make sure you know the financial aspects of your life that you would need help with. When you first sit down with an advisor, you need to be ready to explain in precision your needs. Depending on which phase you are battling in life, so would be your financial management needs. If your financial life is relatively straightforward, you pretty much already know that you might need minimal help from an advisor and vice versa.

2. Choose the Service you Want:

The services provided will, without doubt, vary from advisor to advisor. So choose, they can be:

  • Investment Advice
  • Debt Management
  • Budgeting Help
  • Insurance Coverage
  • Tax Planning
  • Retirement Planning
  • Estate Planning
  • College Planning

When you choose a financial advisor, do not just dive into saying yes to the first one you meet. You need to make sure they have the kind of services that you are looking for or services that you would need help with.

3. Know How Much your Payment Bar is:

Before a few years ago, it used to be more like financial advisors had charged fees that were a percentage of the assets they managed for you. But today, advisors offer a wide variety of fee structures. It helps make their services accessible to clients of all levels of financial means without any restrictions. With all of this in mind, come up with your maximum budget and also how you would want to pay them. Would it be a commission, on how much they manage, a flat fee or more? Today, there are plenty of options they have laid out on the table, and you do not need to hold yourself in with limitations.

4. Research the Financial Advisors:

Financial advisors are not just one type anymore. They come in many forms and with many specialties. You need to do thorough research on the potential advisors. You have to take up the job of making sure that the person who is going to be guiding your financial decisions is completely trustworthy and capable. There are several ways you can find good advisors, through friends, family, online, associations, and so much more. But while you evaluate your advisors, make sure you consider their credentials and do a little research on their background.

5. Do Not Forget to Ask your Advisor These Questions:

  • A fiduciary?
  • Do you always act as a fiduciary?
  • How do you make your income?
  • Your approach to financial planning?
  • What kind of financial planning services do you offer?
  • What kind of clients do you usually work with?
  • Are there any account minimums?
  • Are there any conflicts of interest in managing my money?
  • What information do I need to bring for you to develop my financial plan?
  • How often will we meet?
  • Will you collaborate with my other advisors or attorneys?


Exercising caution in acquiring the right advisor is necessary, especially with the ambiguity in the industry. All of this said, when you do find the right advisor for you, they can help you achieve goals that you initially were struggling with or could not.

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