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Top things to look for when picking a financial advisor

AFP
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If you are looking for better ways to plan for your financial future, chances are good you are going to want to employ the help of an experienced financial advisor.

With that being said, it can sometimes be difficult to know what options that are available are best for you!

Whether you are looking for an in-person financial advisor or would prefer to find an online financial advisor, here are a number of great tips when it comes to identifying the best choices for you.

Education and experience

The number one thing to look out for as you start considering different financial advisors is their experience and education. You need to make sure that the people who will be handling your money are absolutely experts and have years and years of experience. Most importantly, make sure that the advisor or advisors have demonstrated that they can use their education and experience and apply it to help develop a great financial strategy for you.

Official certifications of a financial advisor

Take some time to learn about the various certifications that a potential financial advisor holds. Beyond that, make sure to do some added research in terms of what kind of work is needed to obtain them. That means learning about both the upfront requirements and the ongoing requirements needed to hold a certification.

Some of the best certifications to look out for include a CFP (certified financial planner), a CPA (certified public accountant), and EA (enrolled agent).

Fees and conflicts of interest

Another important thing to do is to make sure that you understand how your advisor plans to be compensated. This will not only help you gain a greater understanding of what you will have to pay for their advice, but also will help you identify fees and conflicts of interest that may exist.

Typically, there are three kinds of ways financial advisors are paid:

  • Client fees
  • Commissions
  • A combination of both

Beyond that, there are typically three pricing models that you will come across, those are:

  • Hourly fee
  • Fixed/flat fee
  • Assets under management fee

Standard of care

Registered investment advisory firms are required to be fiduciaries, which means that they are required to look out for the best interest of their clients above anything else. With that being said, it is important to keep in mind that some types of advisors only have to make sure that their recommendation is “suitable.” All this to say, it is crucial that you find out what a financial advisor’s standard of care is so that you can know what kinds of financial risks your advisors may encourage you to take. Your willingness to take on risk should line up very evenly with your advisor’s willingness to do so.

Working relationship and communication

The final thing to keep in mind when you are looking for a financial advisor is to pay close attention to how your relationship and communication goes in the early days of communicating. That will give you a great idea of what to expect out of your working relationship going forward.




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