How to choose a financial advisor
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Choosing the right financial advisor can have a major impact on your financial future. Whether you’re planning for retirement, investing for the first time, or navigating a complex financial situation, the right advisor can help you build a strategy and stay on track. With so many options available, it’s important to understand what to look for and how to find a fit that matches your needs and goals.
Not all financial advisors offer the same services, and titles can be misleading. Knowing the differences will help you choose someone who fits your needs and goals.
Founded in 2008, Wealthfront is a robo-advisor that offers access to automated index investing to easily put your funds on autopilot. Beyond investing in curated portfolios of ETFs and mutual funds, you can use Wealthfront's other financial services, like a high-yield savings account, bond portfolios, and individual stocks, to add greater diversity to your strategy.
Wealthfront also works with many retirement products like Traditional and Roth IRAs, so you can invest funds with its automated programs while enjoying tax breaks.
Most financial advisors offer a mix of services, but not every advisor specializes in the same areas. Before you choose one, think about what you actually need help with — whether it’s building a budget, managing investments, or planning for retirement.
Take a moment to jot down your priorities and financial pain points. If you’re trying to eliminate debt, look for someone with budgeting expertise. If you’re focused on long-term growth, an advisor with investment or retirement planning experience is a better fit. Keep these goals in mind as you compare options — the best advisor is one who meets your specific needs.
Some advisors have minimum investment requirements — especially traditional firms and wealth managers — while others, like robo-advisors, let you start with as little as $5.
Think about how much you’re comfortable investing right now. The amount you plan to invest can help narrow down your options:
Before you choose a financial advisor, make sure you understand how they charge for their services. Fees can vary widely based on the type of advisor and the level of service, and they’ll impact your overall returns.
You can confirm licensing and background information using FINRA’s BrokerCheck or the SEC advisor database. When it comes to professional designations, look for things like:
Ask if the advisor is a fiduciary — someone legally required to act in your best interest. This is especially important if you want conflict-free advice, since non-fiduciary advisors may recommend products that benefit them more than you.
Researching reviews for advisors that you're interested in can reveal any red flags, poor service patterns, or unresolved complaints. Search for the advisor or firm on:
When you meet with or contact a potential advisor, be ready to ask:
Empower is a financial advisory best known for its retirement planning services, but it also gained a reputation for its high-powered digital tools after acquiring Personal Capital in 2020. Today, anyone can use Empower's financial tools for free with an online account, which includes investment tracking, goal-setting, and budgeting. For the personal touch, Empower also offers clients a team of dedicated financial advisors for a yearly fee of over $100,000.
WiserAdvisor is an online directory that helps connect you to certified financial advisors throughout the USA. With a free account, you can search WiserAdvisor's database to find qualified advisors in your area and see whether they meet your expectations.
It's free to schedule your initial consultation with an advisor through WiserAdvisor, but each provider has unique fee stipulations and minimums. WiserAdvisor also lets you fill out a questionnaire with your financial goals to automatically match you with an advisor with relevant credentials and experience.
After researching and comparing different options, you should know which financial advisor to work with and how to allocate your funds. Also, remember you don't have to spend all your money with one advisor.
It's possible to work with multiple advisory services to take advantage of different specialties, services, and fees. For example, you could work with a personal CFP for help with budgeting and sign up for a robo-advisor to enjoy low fees on investments.
If you decide to work with one or more financial advisors, be sure you account for an exit strategy. While not advisable, sometimes life happens and you need to withdraw money from an advisory account. The only way to prepare for unpredictable scenarios is to review penalties for early withdrawal and factor them into your investment plan.
Miranda Marquit is a journalism-trained freelance writer and professional blogger specializing in personal finance.
Eric Esposito is a freelance contributor on MoneyWise with an interest in financial markets, investing, and trading. In addition to MoneyWise, Eric’s work can be found on financial publications such as WallStreetZen and CoinDesk. When not researching the latest stock market trends, Eric enjoys biking, walking his dog, and spending time with family in Central Florida. Eric holds a BA in English from Quinnipiac University.
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