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8 Tips for Choosing a Financial Advisor

Choosing a financial advisor to help with your finances can be difficult. However, it may be one of the most important steps toward a better financial future. The job of financial advisor is to set up a plan for you tailored to your specific financial situation. They can help with retirement planning, investment strategies, budgeting, taxation, etc.

But if it’s your first time seeking that kind of help, choosing a financial advisor who is right for you can be hard. What qualifications should they have? Are they fiduciary? Here’s how to choose a financial advisor who is right for you.

How to Choose a Financial Advisor in 8 Easy Steps

>>Learn more: 5 Mistakes People Make When Hiring a Financial Advisor

We suggest using the following tips to choose a financial advisor that suits you and your goals.

1. Find a Financial Advisor Near You

You should do a thorough research when choosing a financial advisor. If you cannot find the best ones from your referrals, simply use your best search engine and type in “financial advisor near me.” And thousands of websites listing financial advisors in your local area will pop up. 

But picking the right and best financial advisor can be difficult. That doesn’t mean your “financial advisor near me” search results won’t be helpful. It means that you won’t know which sites are more useful and it can be overwhelming to go through all of them.

Indeed, the best financial advisors are not hard to find; you just have to know where to look.

Alternatively, use the SmartAsset’s free matching tool to see nearby listings and find your financial advisor among the 3 financial advisor near you. Searching for financial planners or advisors near you is much easier with SmartAsset. You simply answer a few questions and the tool will match you with up to three (3) financial advisors in your local area.

2. Get referrals

In addition to the “financial advisor near me” search results, getting referrals is an effective way to find a reputable financial advisor in your local area. Make a list of potential financial advisors from your accountant, bank, or employer.

You can also ask your friends, family members, colleagues for recommendations. If they are or were happy working with one, they will likely recommend one for you. One thing you will notice is that there are different types of financial advisors.

Some specializes in estate planning, retirement planning, while others focus more on investing. As you narrow down your list of the best financial advisors, call each one of them to make an appointment and interview them.

3. Research the financial advisor’s cost

Financial advisor cost is one of the most important factors to consider when you’re choosing a financial advisor. It tells you how much that the financial advisor charges for their service. Some advisors get paid by the hour (fee-only advisor); while others charge on a commission basis or percentage basis.

Some charges more than others. But the average costs for a fee-only advisor should be around $100 to $500 per hour.

So you need to know how much they charge so you know whether you can afford them.

4. Ask if they are “fiduciary.”

There are two types of financial advisors.

A fiduciary financial advisor is an advisor that is required to give you advice that is in your best interest. The other type of advisor is required, usually by their employer, to recommend certain products or strategies to you.

A fiduciary financial advisor is the type that you would want to work with.

SmartAsset’s Free Tool can help you find a licensed advisor near you.

5. Research their credentials

Are the board certified? If so, that’s a good sign. Anyone can call themselves a financial advisor. But if they’re board certified, it tells you that they have the necessary skills, training, education to provide financial advice.

Also, look for misconduct or confirm that the financial advisor has no disciplinary actions against them. Two free websites to check are: BrokerCheck and Investment Adviser Public Disclosure database. They are maintained by the Securities and Exchanges Commission.

6. Consider their experience

When it comes to your finances, experience matters. The more experience a financial advisor has, the better your financial outlook or results will be.

Ask how many clients with your specific situation the financial advisor has helped. If you need help with estate planning, ask how many projects the financial advisor has done for his/her past clients.

7. Research the financial advisor’s firm

While some financial advisors are independent advisors, a lot of them work for an investment firm or financial service firm.

The quality and reputation of that firm is important when choosing your financial advisor. It matters because financial advisors at top-rated investment firms have more resources and can provide better results. 

Therefore, you need to check the reputation of the firm your potential financial advisor works.

8. Review financial advisor reviews

Reading what other people have to say about a financial advisor can provide insight into how a financial advisor operates. You can learn about how well clients trust the financial advisor, how much time the client spends with the advisor, and how well he or she answers question.

Keep in mind that a happy client is less likely to give feedback than an unhappy one, so try not to base your choice of a financial advisor solely on client’s ratings and reviews.

In conclusion, you can find a financial advisor from:

How do you choose a financial advisor? Do you consider financial advisor near you? Do you consider how much financial advisor costs? 

Tell us in the comments section below.

Also, check out 5 Questions to Ask a Financial Advisor, to help you know how to choose a financial advisor.

Work With the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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One Reply to “8 Tips for Choosing a Financial Advisor”

  1. I thought that it was helpful when you mentioned that we should consider finding a financial advisor who has good reviews. I hadn’t thought of checking the reviews before now. My wife and I have been talking about finding an advisor to help us with our finances, so we could get ready for retirement. When we look for one, I will be sure to check their reviews.

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