4 Steps to Choosing the Best Financial Advisor for You

Choosing a financial advisor can be tricky. Your life’s savings are no small matter, and you don’t want all that money in the wrong hands. It’s completely normal to feel confused, and even a little worried, when looking for financial help. 

If you want to ensure you’re confident in your financial decisions, but don’t know where to start, read on for our four tips on finding the best financial advisor for you.

#1: Figure Out Your Budget

If you’re spending more than you can afford on a financial advisor, you’re probably not doing your wallet any favors. Depending on your budget, there are several different options to choose from, like:

• In-Person Advising – Traditional advising leans toward the expensive side but offers more personalized service. If you’re handling a large amount of money, this is probably the best route for you.
• Online Advising – Online advising connects you with real advisors via the web. Not only is it generally more affordable, but with COVID-19 putting restrictions on in-person work, it might also be your most viable option. 
• Robo-Advising – Another option that’s social-distancing friendly, Robo-advising uses financial planning software (with some human assistance) to help you manage your assets. This option is also particularly good at predicting stocks and market changes with mathematical algorithms. If you’re looking for straightforward assistance that won’t break the bank, you might want to consult your friendly neighborhood robo-advisor. 

#2: Decide on a Payment Method

While some advisors accept hourly fees, others charge a flat rate annually or per session. Other financial advisors will instead accept a small percentage of the money they manage as payment (typically between 1-3%). 

This type of advising poses certain risks and certain rewards. One school of thought is that you’re paying a premium for better quality—if you’re making money, your advisor is making money, which motivates them to work harder. On the other hand, percentage fee advisors can potentially lead you away from certain decisions you want to make, in an attempt to protect their own interests.

Weigh your options and choose an advisor who offers a payment plan you’re most comfortable with.

#3: Vet Your Advisor

The last thing you want is someone with a checkered past handling your money. That’s why it’s important to perform a thorough vetting process before choosing a financial advisor. 

Perform a background check on anyone you’re considering hiring. Most certified advisors will have information available on the Securities and Exchange Commission website. If this isn’t enough for your comfort, try a third-party background-checking site.

Financial advisors can hold a multitude of different certifications, such as:

• Certified Financial Planner (CFP) – This is an advisor who has several years of experience under their belt. Certified financial planners are also required to pass a seven-hour test to receive their certificate. This is a great option for full-service financial planning.
• Chartered Financial Consultant (ChFC) – This is an alternative certification to the CFP, and specializes in more specific financial needs. If you’re hiring an advisor for a particular reason, rather than overall fiscal planning, this is a great option.
• Chartered Financial Analyst (CFA) – This type of advisor is great if you’re looking to start investing. If you have money and you’re looking for a way to turn it into more money, a CFA may be the advisor for you. 
• Certified Public Accountant (CPA) – This certificate is typically held by accountants and tax specialists. If you’re looking for simple advising, this is a great option.

#4: Get to Know Them

Allowing someone to handle your money requires trust. To ensure you’re choosing the best person for the job, try holding several meetings with your potential advisor(s), rather than basing your decision on one conversation.

Don’t meet with one advisor and call it a day. While certifications and specialties are great on paper, you want to make sure you get along with them as a person, as well.

Find an advisor who shares similar values, concerns, and goals for your money. Treat this process like dating—you wouldn’t marry someone you met online after just one dinner, right?

A Big Decision

Don’t take this search lightly. Your finances are a big deal, and you want to make sure you’ve found the perfect advisor to oversee this enormous part of your life.

It may take a little while, but eventually, you’ll find the right person. Just make sure you gather all the necessary information before you make a decision. The potential risks of choosing the wrong person are steep, but if you find someone who knows exactly how to handle your money, you certainly won’t regret it. 

Recommended: How To Choose A Personal Financial Advisor