When You Don’t Know? How to Find a Financial Advisor That Meets Your Needs I used to be skeptical about financial advisers.
I assumed there was all the other icing on the cake. I thought that as a self-proclaimed personal finance writer and money expert, I know everything I need to know about my investments.
. After an hour in your office, I have already scheduled another appointment for the next quarter. But after a friendly conversation with a colleague of mine, I decided to consult with a counselor to make sure I was diverse enough
What I learned in the short meeting has stayed with me ever since: I can be an “expert” in certain areas, but there is a difference between laypeople and the experience of a Certified Financial Planner ™.
Since I started working as an advisor, I have never had more confidence in my portfolio. My advisor was able to pinpoint blind spots I never knew existed, noted areas where I needed improvement, and gave me a concrete strategy for the future.
Know this first. If you are looking for a good financial advisor, don’t pull the trigger just yet.
How to Find a Financial Advisor That’s Right for You
It’s about making a connection with someone you can trust.Finding the right financial advisor is not just about buying quality service.
This means you know what you need, what to look for, and what to avoid. Even if you decide to turn to a Robo advisor, you should feel that your financial future is secure in your hands.
1. Know what you need from your financial planning company
You can hire a designer from the company every month to check your invoices and give feedback if something changes. Financial planning companies can help in several ways. Many people review their invoices with a designer annually or quarterly. Think of it as a financial spring cleanse.
A financial planning company can be especially helpful if your financial situation changes dramatically. For example, a 22-year-old who inherits $ 100,000 when his father dies needs to find a planner to determine the best path.
Someone interested in learning more about retirement accounts, index funds, and the difference between an IRA vs. 401(k) may not need to see a planner as often as a consumer less interested in investing. How often you need to see a financial planner depends on how good your investment feels and how difficult your financial situation is.
It is also helpful to find a financial advisor who is familiar with the situation. For example, if you are divorced, find a financial planner who specializes in divorce and mixed families. They can highlight certain blind spots that a general financial planner may be overlooking. You may also need a counselor close to your age because they will understand your specific concerns in a more personal way.
2. Understand the financial advisor business model
There are three main ways to pay advisors: commission-based, fee-based, and fee-only.
If you buy a life insurance policy recommended by an advisor, the life insurer will pay you. Clients do not pay commission-based advisors directly. Commission advisers receive compensation for purchasing a product based on a customer’s recommendation.
Commission-based advisors are generally best avoided because their recommendations, such as annuities and whole life insurance, are often expensive.
Beware of financial planners who make money on any commission. Fee-based advisors can be paid directly from the client, but can also earn a commission if the client purchases one of their referrals. This model encourages designers to choose investments that allow them to earn more money, even if they are not suitable for the client.
One-time advisors can be paid on an hourly, flat rate, or percentage of assets under management (AUM), depending on their business model. The most objective pay structure for a financial planner is the pay-only model.
For example, if you invest $ 500k in a financial planner who charges 1% AUM, you would pay $ 5,000 a year. With a flat-rate financial planner, however, you can pay a one-time $ 1,000 fee for a comprehensive financial plan.
I paid between $ 600 and $ 800 for financial planning where I received specific investment recommendations based on my checking accounts. A qualified designer who only pays fees should provide an estimate of how much you will charge in advance.
3. Hire a Certified Financial Planner™
If you don’t do research, someone who professes to be a financial planner may trick you or prescribe products that don’t fit your situation. Accreditation is not required to refer to you as a financial planner or advisor.
This designation means that they have taken a complex exam, with topics ranging from insurance to budget planning to taxes. The best type of financial planner is a Certified Financial Planner ™ (CFP®). CFP® also has a duty of trust, which means it must offer investments and other products that are in the best interest of its client, whether or not they are compensated for it. This is the biggest ethical obligation of a financial planner.
4. Make a list of questions
You should always research a financial planner before handing over the money. Here are some good questions:
- Are You a Certified Financial Planner ™?
- What qualifications do you have?
- Do you have a trustee role with your clients?
- How long have you been working?
- Do you have a comment or recommendation?
- What is the average buyer (age, income, etc.)?
- What situations did you specialize in?
- How do you liquidate your customers?
5. Look for a financial advisor
It is important to consider what type of counselor is best for you before you cut into it. There are two main types of financial advisors to consider: Robo advisors and human advisors.
Theft advisors are financial companies that use proven algorithms to advise based on a user’s own financial situation. Most Robo advisors charge low fees and have little or no minimum deposit requirement.
If you are ready to learn how to start investing but are unwilling to pay for the full financial planner, then an auto advisor may be the best option.
Create a retirement account directly with a Robo advisor and they will take care of the purchase of the funds. Theft advisors choose the investment location and take care of all the essential details. They can even suggest how much you should save for retirement based on your goals, income, and age.
Often, this is only possible if you invest a certain amount of assets in the company or if you pay an additional fee. Some Robo advisors offer access to human advisors who can answer more specific questions.
An automated advisor is a good alternative if you can’t afford a traditional financial planner, but still need expert help in choosing your investments and deciding how much to save for retirement.
3 Robo advisors to consider
Users sync their employer retirement account and the app suggests what to invest in. Robber advisor focusing on Blooom 401 (k), 403 (b), and other company-sponsored retirement accounts.
Blooom This Robo advisor has two options: a simple, free scan and a comprehensive plan for $ 120 a year. examines the fees for each fund to minimize these expenses. More information about this Robo advisor can be found in our Blooom review.
Betterment You can sync all your external accounts with Betterment and create a Betterment taxable or IRA account. works with employer-sponsored accounts, IRAs, and taxable brokerage accounts. There is a 0.25% fee for each account and there is no minimum deposit. Our Betterment review covers all the details you want to know.
Wealthfront. Investors can open a Wealthfront-based account and allow the application to select what to invest in, or link all of their current investment accounts to Wealthfront and allow them to make recommendations. is another respected theft advisor. The app chooses cheap funds to minimize fees. Wealthfront charges a 0.25% consulting fee on all accounts and requires a minimum deposit of $ 500.
Finding a qualified financial planner you can trust with your money is another story. A human financial planner is easy to find. Here are some nets that you can look for a designer to suit your needs.
XY Planning Network: All of the advisors listed are only Certified Financial Planners ™ who pay fees and have a fiduciary responsibility to their clients. This design network was designed for Gen Xers and millennials looking for professional and affordable help. You can find an advisor based on your location or specialty.
National Association of Personal Financial Advisors (NAPFA): NAPFA advisors specialize in areas such as LGBT couples and families, professional athletes and artists, and socially responsible investors. NAPFA-accredited advisers must have at least three years of experience, be loyal, and be approved by a peer review.
The Garrett Planning Network: You can look for local opportunities or virtual advisors who can conduct phone or video inquiries. Any member of the network must be a Certified Financial Planner ™ or work towards a CFP® license, have only one fee structure, and pay by the hour or by retention.
How to Find a Financial Advisor: Don’t Settle
Choosing the right one can mean the difference between driving for 15 years or breaking down on the side of a road. A financial planner is like a mechanic. Don’t settle for a designer who is condescending, is too busy, or apparently doesn’t care about your needs.
You can try both to see which experience you prefer. If you are not sure how to choose between a Robo advisor and a financial planner, make a list of pros and cons.
If you can’t cut your financial planner costs, just use a Robo advisor. Remember, the best solution is what you will actually do. If human interaction is a priority, choose a financial planner. The key is to feel comfortable, confident, and secure about your financial future.