How To Find and Choose A Financial Advisor

Planning for the future can seem daunting, especially in financial uncertainty. Thankfully, you don’t have to do it alone. With the help of a qualified financial advisor, you can gain expert insight into current financial trends and create an actionable plan to meet your long-term money goals, whether saving for retirement or investing in new business ventures.

Most importantly, finding and choosing the right financial advisor is much more simple than you might think. In this guide, we'll explore the life-changing role that a good financial advisor can play in preparing for your future and help you find the best advisor for your needs in just a few easy steps.

Understanding the Role of a Financial Advisor: What They Do & Why You Need One

If you thought financial advisors were only for top earners and major corporations, think again.

Contrary to popular belief, nearly anyone can benefit from the insight of a skilled financial advisor, especially during major life changes like getting married, having children, and preparing to retire. These advisors can be used by everyone from growing families to large-scale organizations and individuals alike.

In other words, think of your advisor as a financial guide, providing you with support and insight at every stage of your life. To become a financial advisor, these professionals undergo extensive training and education to receive their licensing and certifications, which means you can trust that your finances are in the hands of a skilled professional.

The Top 5 Types of Financial Advisors and Their Services

As we've mentioned, financial advisors require specialized training to become certified in their field, but that doesn't mean all financial advisors are created equal. In fact, there are many different types of advisors to choose from, and understanding their services is crucial to ensuring you find the right match.

1. Investment Advisors

If you’re looking to grow your investment portfolio or start building one from scratch, an investment advisor is an individual or company who can give you clear advice on what you should (or shouldn’t) invest in. Some of these advisors can also manage your assets directly if they have the proper qualifications.

2. Financial Planners

Certified Financial Planners, or CFPs, can offer a broad range of services to their clients, including creating personalized plans to pay down debt, save for retirement, and create sustainable money goals based on each family’s unique needs.

3. Asset Managers

While some asset managers can also offer other financial services, their primary role is managing each client's portfolio, ensuring they get the best results from their investments. This is a great option for anyone with multiple assets who doesn't have the time to manage their investments all on their own.

4. Brokers & Broker-Dealers

Another great financial resource to have is the help of a broker or broker-dealer who can buy and sell stocks, bonds, and mutual funds on your behalf. This can help you increase your worth and build a reliable nest egg for the future.

5. Financial Consultants

For a more general approach to financial expertise, a financial consultant can help you plan for your future by providing advice based on current money trends. However, the term "financial consultant" can be used by anyone, so make sure your consultant has the credentials to back their services up.

Benefits of Professional Financial Guidance

Now, the most important question: Why should you consider hiring a financial advisor?

Many people make the mistake of trying to manage their finances themselves, but this can cause you to miss major financial opportunities and create unnecessary stress in your life.

With the help of a skilled financial advisor, you can create powerful strategies for:

• Retirement Planning: Start planning for your dream retirement, even if you have no idea where to start.

• Starting A New Business: Find reliable funding and create profitable revenue streams for new business ventures.

• Tax Preparations: Avoid overpaying on your taxes and take the headache out of tax season.

• Family Budgeting: Plan for new additions and build savings accounts for college, family vacations, and more.

• Building Investments: Create and manage high-yield portfolios to give your family a better financial future.

3 Steps to Finding the Right Financial Advisor

Of course, there are a lot of financial advisors to choose from, especially if you’re looking at general financial planning or consulting. Unfortunately, this also means that there are many less-than-qualified candidates touting their services, leaving you vulnerable to predatory practices.

Your financial advisor should be someone you can completely trust with your family’s most valuable assets, and choosing the right advisor can make or break your financial future. That said, there are a few simple steps you can take to find and choose the right advisor for your needs.

1. Use Trusted Online Platforms to Compare Advisors

A quick Google search will turn up dozens of online financial advisors and other financial planning platforms. Many of these platforms can match you with a financial advisor based on your needs and goals, but keep in mind that they often have motives of their own.

At Financial Advisors, Mortgage Brokers, and Accountants, we pride ourselves on connecting our partners with the most qualified professionals in their area, which allows us to be transparent and unbiased during the search process.

2. Ask for Referrals from Friends, Family, or Colleagues

If you haven’t already started asking around about potential financial advisors in your area, friends and family members are a great place to start. You might be surprised at how many of your loved ones and colleagues are already leveraging the insights of a skilled advisor to meet their financial goals.

3. Carefully Vet Potential Advisors

Whether you choose to find a financial advisor through an online network or by asking around, remember that certified financial advisors can be easily verified through their credentials and licenses. You should carefully vet all potential advisors before making your final decision, no matter how many rave reviews they may have.

3 Simple Questions to Ask Financial Advisors You’re Vetting

Not sure how to vet a potential financial advisor?

Not to worry. You can ask these three simple questions to get the answers you need from every advisor on your shortlist of candidates.

What are your credentials?

All financial advisors undergo some form of education or training to work in the field, so asking for their credentials is always the best place to start. Besides having a college degree, qualified advisors will have some form of certification or licensing from top financial organizations, including:

• The CFP (Certified Financial Planner) Board

• The Financial Planning Association

• Association of African American Financial Advisors

• The National Association of Personal Financial Advisors

Of course, these certifications will vary depending on the types of services each advisor offers. For example, an advisor who focuses on asset management may be designated as a Chartered Financial Analyst (CFA), while someone who focuses on tax preparation and other financial planning could be a Certified Public Accountant (CPA.)

How many years of experience do you have?

While having less experience isn’t always a deal breaker, it’s still a good idea to ask potential advisors how long they’ve been working in the field. This can help you compare candidates and ultimately choose the right person for you.

What types of services can you provide?

Finally, make sure you clarify which services each advisor provides. Some may offer general financial advice, and others may only focus on investments and broker services.

Different Fee Structures of Financial Advisors

Depending on the type of advisor you choose, their fee structure can vary greatly. The most common ways financial advisors collect payment include:

Fee-Only

For one-off services, an advisor might only charge you a flat fee. This is most common when creating financial plans for businesses and other ventures.

Commission-Based

If you’re looking for an advisor to help you buy mutual funds or annuities, these professionals often work for commissions, which means they’ll take a small percentage of what you earn from the transaction.

Hourly Rate

Many CFAs and CPAs operate off an hourly rate, giving you more flexibility during time periods when your financial planning needs are less than others.

Retainers

Alternatively, you can also have a financial advisor put on a retainer, allowing you to use their services as much as you need for a fixed rate each month.

Percentage-Based Fees

For asset managers, you can also take advantage of percentage-based fees, which range from 0.5 - 2% and are based solely on the number of assets you have in your portfolio.

Average Costs and Fees: What To Expect From Your Investment

Overall, the cost of hiring a financial advisor will depend on which types of services you need and what pay structure they offer.

Hourly Rate

For example, an hourly rate may be between $150 - $400 based on the complexity of your investment portfolio. Some advisors may charge more based on their experience, time in the business, and possibly results.

• It is important to do the math when it comes to hourly engagement because your overall cost may exceed a high percentage rate cost based on your portfolio.

• You also have to be strategic in your engagement with any hourly rate advisor as you don’t want to burden the advisor with needless questions or requests that drive up the cost.

• Overall, you have to understand what to expect from your investment and then ‘back’ into the cost and see if it makes logical sense.

Flat Fee

Another example would be a flat fee. This fee could range anywhere from $1,000 - $3,000 per service, like the creation of a financial plan. This may be a tough way to go if you are just starting out building your portfolio.

• One thought may be to bundle a fee-based structure with a commission-based structure and see if you can meet your investment expectations. This way, the cost for the fee-based tasks may get reduced because the advisor is getting a commission on your overall investment.

Commission-Based

On the other hand, a commission-based asset manager may vary based on the experience of the advisor and the complexity of your investment portfolio. If you have a $1,000,000 portfolio, an advisor may charge 2% annually ($20,000) or only 0.75% annually ($7,500). The average range is generally between 0.25% - 2.0% annually.

• It is important to know which functions are included with the percentage-based advisor fee and what annual return the advisor will achieve for your investment. This will help you get your arms around what to expect for your investment.

Final Thought

If you’re ready to take control of your finances, a certified financial advisor can be a great ally to have in your corner, and finding the right candidate doesn’t have to be complicated. Sit down, look at all of your options, run the numbers, and see what makes sense for you in your current situation. Then move forward with the choice that is most effective. To explore qualified advisors in your area, connect with our team today.

Need help navigating your financial journey? Whether you're looking for financial planning support or business guidance, connecting with the right advisor can make all the difference. Click here for a free consultation and find the trusted professional who can help you achieve your goals.