picking a financial advisor

The Complete Guide to Picking a Financial Advisor: Everything to Know

VWB Blog 1 year ago 9

Did you know that in a recent survey, 59% of Americans want financial advice?

Financial freedom is one of the main goals of many Americans. Knowing what you need to pay and allocate your money to is a stress that many of us already know too much about. Are you looking for a personal financial advisor to help you understand finances and plan for your future?

If so, you need to learn as much as possible about picking a financial advisor. This includes what to look for, so you can make the right decision.

Continue reading to learn what you should consider when you’re looking for a financial advisor.

Analyze Your Needs and Goals

Analyzing your needs and goals is key to picking a financial advisor. Everyone has different circumstances. The right financial advisor can help you reach your goals in the most efficient and cost-effective way.

Before engaging a financial advisor, you must assess your current circumstances. Determine what your needs and objectives are.

Setting measurable goals is necessary before exploring a suitable financial advisor. Evaluating your financial history will result in selecting a financial advisor who best meets your needs.

Understand Different Types of Financial Advisors

Financial advisors hold an important role in the personal finance world. They help people make smart and responsible decisions with their money.

Different types of financial advisors offer various levels of services. It’s important to understand which expertise best suits your financial needs.

Fee-Only Advisors

They provide comprehensive financial planning services without any commissions or fees based on sales. These advisors typically charge for their services on an hourly or flat rate basis.

They’re required to act solely in the client’s best interest. This means they must always provide objective advice based on the client’s financial best interests.

They are not allowed to receive compensation from anyone other than the client for whom they are providing advice. They are not allowed to sell products or receive compensation from third parties. As such, they offer a higher level of trust from the clients, who can be sure they will not be pushing products that they don’t need.

Commission-Based Advisors

These advisors make their money from commissions from the products they sell. An example of these is life insurance and mutual funds. They may provide advice, but the advice is not impartial since their commission depends on the products being purchased.

This type of advisor is not bound by the fiduciary standard. They may only receive a commission when a sale is completed. They must also be aware of the potential for a conflict of interest as their compensation is based on selling particular products.

This advisor model is not the most suitable option for clients who may need more comprehensive advice. It is best suited to those who rely on their own research and don’t require much-personalized advice on their finances.

Discount Advisors

These advisors generally provide a limited range of services for less money. They usually focus on a few areas, such as investments or retirement planning. They will also help you with budgeting and other financial decisions, but their services are limited in scope.


Robo-advisors are a type of financial advisor that offer automated portfolio management services. They use algorithms and data to create user portfolios.

They are cost-effective and efficient. They also allow for greater control of the portfolio, with automatic rebalancing and transfers.

Some of the advantages include low management fees and 24-hour access to portfolio information. However, they do not provide customized advice, which human financial advisors can do. Additionally, they have limited access to the investment universe.

Identify Qualified Financial Advisors

This is an important step towards ensuring that you are picking a financial advisor who can help meet your needs. It is important to keep in mind any qualifications or certifications that one may need to have. Financial advisors should be registered with either the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) and should have financing advising experience in the areas that you need most.

It is also wise to research the financial advisor’s background. This is to ensure that he/she does not have any unresolved legal issues or financial disputes.

It is important to check references from the advisor’s past clients to verify their expertise. It is also imperative to ensure that fees and services are established before having a financial relationship.

Assess Risk Comfort Levels

When assessing a financial advisor, it’s important to be aware of your familiarity and comfort levels with risk. They should take your financial goals, needs, and concerns when devising a plan. This will help them in managing money and develop an investment strategy.

You should feel empowered to express your risk comfort levels during your initial meetings with them. A good advisor will not try to push you into a risky strategy but rather take a conservative approach to ensure you’re comfortable.

Keep in mind that all investments come with some degree of risk, so it’s important to be honest with your advisor. The more information they have regarding your financial situation, the better they’ll be able to develop a plan that both meets your long-term financial goals and reflects your risk tolerance. You can learn more about financial advisors here if you are looking to invest in real estate.

Picking a Financial Advisor

Picking a financial advisor can be a daunting task. But with a little research and careful planning, it is possible to pick an advisor who meets your needs. The right financial advisor can make the difference when it comes to your money and financial future.

With insight into the different types of advisors, costs, and credentials, you can make the best decision possible to help secure your future finances. Start your search now to reap the benefits of having a trusted financial advisor.

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