How to Choose Your Financial Advisor

A financial advisor helps in deciding how to manage your money and reach your financial goals. Different types of advisors exist but, which one is the best for you, and what factors you must take into consideration when hiring your financial planner?

For instance, you may want an extra set of eyes to manage your retirement accounts. Or, maybe you want expert money advice so you can make the best decisions today with your money.

Whatever your money goals are, a financial advisor can provide guidance and peace of mind. Before you choose your financial advisor, take a few minutes to learn more about what they do. Not all financial advisors are alike.

What is a Financial Advisor?

A financial advisor, or financial planner, is someone who helps you organize your money, in order to be well prepared for retirement. They can also help you in making wise financial decisions and reach your financial goals efficiently and effectively.

It is important to mention that not all financial planners are alike. Therefore, you must take into consideration the level of education, training, and professional experience of your future financial advisor.

In order to receive professional assistance and improve your financial decisions, you must know what is financial planning, the difference between several types of financial planners, what a professional financial planner does, and finally, decide how you are willing to pay for your personal financial planner.

Financial Planning

Financial planning is known as the process of defining what your financial goals are, such as when to use your money for what purposes, and setting an effective plan to achieve your financial plans and goals for the future.

In order to receive good advice and tips from your financial planner, this last must first gather your personal information which will be later used to create projections showing how and when you will accomplish your goals.

Therefore, it is important to keep in mind that a professional financial planner will not give any advice before understanding your aims and goals for the future unless you are talking to a salesperson.

What are the Different Types of Financial Planners?

As already mentioned above, financial planners are not all identical. Below are the various types of financial advisors who help you manage your money in different ways:

  • Robo-advisor: is a digital service which provides online financial advice for a very low cost. You will be asked personal questions through which your portfolio will be built. After that, a set of planning tools will be offered, however, if you prefer human guidance, you can still consult with advisors online for a reasonable price.
  • A certified financial advisor is someone who completed an education degree or relative training, passed tough exams, and demonstrated professionalism in the work field.
  • An enrolled agent is someone who focuses mainly on tax preparation.
  • A registered investment advisor provides professional planning and advice services for a particular fee. This type of advisors must be registered with the United States Securities and Exchange Commission.
  • Broker or stockbroker: this type of a financial advisor sells products on behalf of their clients for a particular fee or commission, sometimes both. In addition, a broker or a stockbroker must pass required exams and register with the United States Securities and Exchange Commission.
  • As for the advisors who mainly focus on high net worth clients, are called wealth managers.
  • If you are looking to build a successful investment portfolio, then you might want to hire a chartered financial analyst.

The Strategy of a Good Financial Planner

A financial planner takes into consideration several factors before providing professional advice, including the following:

  • What must you change in your financial habits
  • How much money do you need to save
  • What are the best retirement accounts to use
  • What type of insurance do you need (i.e. life insurance, car insurance, health insurance, disability insurance, and others.)
  • What type of mortgage must you have
  • What amount should you keep in your emergency fund
  • How to improve your tax situation
  • How much risk can you take when investing
  • What return rate is necessary to achieve your financial goals during a particular time frame

Additionally, you might want to ask your advisor to provide written recommendations, as it leaves no questions or doubts as to what was said orally.

How Much Are You Willing to Pay?

Financial planners charge differently, therefore, you must always ask the advisor you are willing to hire for a clear explanation of how they prefer getting paid (hourly rate, flat rate, quarterly or annual retainer fee, commissions, etc.).

Some of the financial advisors charge a fee as a percentage of assets they manage for you. The fee varies from 2% to 50% per year. Usually, the more assets are managed on your behalf, the lower the fee is.

Keep in mind that if you are working with a registered investment advisor, this last must provide you with the ADV Part Two (a disclosure document) which states in details potential conflicts of interests and all fees that must be paid.


A financial advisor can help manage and preserve your wealth. If you’re not comfortable doing it yourself, the expense of an advisor can be worth it.

Why do you want to use a financial advisor? Please leave a comment below.

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