How to Find a Good Financial Advisor

Financial planners are business experts who advise clients on the best ways to invest, save and grow their money. They also help when it comes to tackling certain goals like preparing to purchase a mansion or give you the breakdown of your spending as well as the interplay of different assets that you own. Some financial planners specialize in the estate or retirement planning, while other work as consultants on a financial matter. Every entrepreneur or investor will in one way or another need the services of a financial advisor and these are the tips to help them in their hunt.

Be Selective


When looking for a sound financial advisor, you need to be picky. Assess and know many candidates before you pick on one. What matters the most in this hunt is personal chemistry, you cannot pay someone to be your personal advisor, and you don’t feel at ease with them. Advisors in most cases offer a free introductory session to help go through needs of clients, how they work and what to expect of them if hired, and the cost of their services. Since this session happens before making any formal arrangement, it is important you make the most of it. Excellent advisors will take a minimum of one hour to learn about your general financial picture, for instance; your income needs, goals, health, tax status and your insurance coverage quality. All these happen before recommending any particular investment. Spend time when picking the right financial advisor.

Learn to work with fee-only financial advisor

It is important to align your interest to working with a financial advisor who doesn’t accept commissions. Different advisors have different conflicts when it comes to payment, but fee-only advisor has the least conflicts. Fee-based advisors are different because, along with their normal fees, they also receive a blend of commissions. Fee-only advisors will charge a particular percentage of your asset per year, for instance, 1 to 2 percent annually to manage your money on a regular basis. Others will charge a general fee of about $100 to $300 hourly for setting up a financial plan or simply a periodic advice. Therefore, as you look forward to hiring a financial advisor, check on their charges as well as modes of payments. When you hire the advisor, no hidden charges should come up to cause confusion.

Perform a background check

Background check ensures you know your advisor well if they are registered, where they have worked before, and there are also virtual assistance where you can query about the organization your advisor belongs to if they have a disciplinary history, for instance, American Institute of CPAs or CFP Board. The background helps you know your potential financial advisor better and compare with other qualified candidates to come out with the best.

Know the alphabet soup

  • Chartered Financial Analyst – CFA is a specialist in investing.
  • Certified Financial Planner – CFP is a generalist who helps when it comes to studying and learning about the financial picture of a client.
  • Certified Public Accountant – CPA is a tax expert.
  • Chartered Financial Consultant – ChFC is an expert with extensive knowledge in estate and insurance planning.

Note that these will help you during your hunt for a financial advisor. With these titles, you know which advisor you may be looking for depending on your area of interest.

Ask Questions

Before you hire an advisor, it is important to learn everything about their background, specific areas of expertise investment policy and fees. If you feel you need to speak to other advisors, you should feel free to ask for a reference. Again, before making a final agreement on paper, ensure you and your advisor clearly understand the services he or she will offer and the duration you will work together. Also, it is important to agree on whether you are eligible to get a refund just in case your work relationship ends early.

Avoid another Madoff

The best advisor to hire when looking for one to manage your investments on your behalf is that who uses a third-party custodian. Advisors who use independent custodians may drain your money and fudge account statements. Advisors using third-party custodian are safer to work with than those using independent custodian.

Don’t confuse a financial planner or advisor with stockbrokers who are market mavens called by people to trade stocks. Also, financial planners are different from accountants who specialize in helping you lower tax bill. They are also not insurance agents who entice you to sign up for complicated life policies.

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