Choosing a Financial Advisor: What You Should Know Beforehand

Working with a financial advisor to meet financial goals, grow wealth, and strategize for the future is a smart money management choice.

Financial advisors offer a wide range of services, filling specific niches in the industry. However, the title “financial advisor” is not federally regulated. Anyone may call himself a financial advisor without the knowledge or credentials to back up the title. In other words, just because someone identifies as a financial advisor does not prove he is qualified or devoted to your best interests.

Therefore, choose your financial advisor wisely so that you and your money will be in good hands. Here are three steps to promoting your future financial wellness.

1. Know Your Financial Needs

Assess your financial service needs to narrow down what kind of financial advisor you should consider.

Some standard services include:

  • Budgeting
  • Investing
  • Debt management
  • Short- and long-term savings goals
  • College planning
  • Retirement planning
  • Estate planning
  • Holistic financial management

Your season of life is also a factor. For example, a single, dependent-free young adult grappling with student loans has different financial goals than a seasoned business investor. Although these clients’ needs differ, both can benefit from a financial advisor’s advice.

2. Consider Different Types of Financial Advisors

In choosing the right financial advisor, look for someone who has your best interests at heart:

  • Fee-only Fiduciaries

You pay fee-only advisors directly on an hourly rate or flat-fee basis. Others accept a percentage of the assets they manage. Most fee-only advisors are also fiduciaries, which means they are legally required to act in your best interest.

  • Commission-based Advisors

Commission-based advisors are not fiduciaries and earn money by selling insurance and investments via a third party. Use caution when working with this type of advisor. However, commission-based financial advisors are not necessarily the wrong choice. Some products, like life insurance, are sold under a commission model. Planners who sell life insurance on commission may also be fiduciaries who advise you in other areas.

  • Investment Advisors

Anyone giving investment advice must register with the state or the U.S. Securities and Exchange Commission. This registered status makes them fiduciaries legally required to act in your best interest. Registered Investment Advisors, or RIA’s, have passed the Series 65 Exam administered by the Financial Industry Regulatory Authority (FINRA).

Depending on their fields, many RIA’s obtain certified financial planner (CFP), chartered financial consultant (ChFC), or certified public accountant (CPA) designations. These certifications underscore their fiduciary duties.

3. Do Your Research

When looking for a financial advisor, do your homework to find a trustworthy and competent one. Consult with family and friends for their recommendations.Personal referrals remain paramount to finding good service in any industry.

Google reviews, social media presence, reputation, and brand recognition are also telling. However, be sure to make a thorough inquiry. When you first sit down with a potential financial advisor, ask these questions:

  • What is your client profile?
  • Do you have other clients with similar needs?
  • What is your fiduciary status?
  • What is your compensation structure?
  • Do you have account minimums?
  • Do you have conflicts of interest?
  • Are you committed to transparency?
  • Is my information secure with you?
  • What kind of communication can I expect from you?

The Robert Joseph Group is a leading financial staffing firm. Our years of experience and targeted recruiting methods equip us with the answers you are looking for — whether you are searching for your next career step or need talent solutions for your team. Contact us today, and let’s begin