Which Financial Advisor to Choose? Making the Right Decision

*Not financial advice. Your money, your choice*

When it comes to managing your finances, sometimes we don't have time or we don't want to learn everything that we need to know. Financial professionals can provide great advice and guidance to help you make great money decisions. However, especially when it comes to "financial advisors" not all are created equal, and choosing the right one can be daunting; similar to finding just the right tulip on a tulip farm.

I took this pic at Rozengaarde

Here are some tips to help you make the right decision on who to hire...

1. Understand Your Needs

The first step in choosing a financial advisor is to understand your own needs.

• What are your financial goals?

• What are your concerns, fears, and beliefs about money?

• Do you need help with retirement planning, investment management, or debt reduction?

Knowing what you want to achieve and what type of advice you need can help you narrow down your search for the right financial advisor.

2. Research Different Advisors

Once you've identified your needs, it's time to look for some different financial advisors. Look for advisors who specialize in the area where you need help. Check out their websites and read reviews from other clients. You can also check if they are registered with the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA). If they are, that's usually a great sign though some FINRA licenses may indicate that part of the persons comp is from commission on securities sold which can make it harder for them to act as a fiduciary.

3. Ask About Their Credentials

When it comes to personalized financial advice, credentials can matter a lot. The big word here his "fiduciary". Someone who is a "fiduciary" is legally obligated to look out for the best financial interests of their clients.

I would generally want to avoid someone who's trying to sell me certain securities that they earn commissions on or if they are trying to sell me whole life insurance. I'm 24, have no dependents and no financial obligations that my next of kin would be responsible for if I died so it makes little sense outside of covering funeral costs. I'd generally be looking for financial advisors who hold professional certifications like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). These certifications require rigorous training and testing, and advisors who hold them have demonstrated a high level of expertise in their field.

4. Consider Their Compensation Structure

Financial advisors can be compensated in a few different ways, and it's important to understand how they get paid. Some advisors charge a flat fee (like 1% on assets under management), an hourly fee (like $100/hr), while others earn a commission on the financial products they sell (often uncapped and can get in the way of fiduciary responsibilities). Still, others use a combination of fees and commissions.

In my opinion, I would be looking for advisors that charge a flat fee or (ideally) a flat hourly rate because 1% of assets can get quite expensive over time. It may, however, still provide a great return if your advisor charges a 1% fee especially if you're a high net worth or ultra high net worth individual. Lots of the alpha from having wealth management professionals also come from trust services which can juice the ROI. The Bottom Line: make sure you understand how your advisor will be compensated and how that might affect the advice they give you.

5. Schedule a Consultation

Once you've narrowed down your list of potential financial advisors, schedule a consultation with each of them. This will give you a chance to meet them in person and ask questions about their experience, philosophy, and approach to financial planning. It's also an opportunity to get a sense of whether you'll be comfortable working with them over the long term.

6. Trust Your Gut... kind of.

Finally, trust your gut. A financial advisor is someone you'll be working with closely for years to come, so it's important to feel comfortable and confident in your choice. If something doesn't feel right or you're not getting the answers you need, it's okay to keep looking.

Choosing a financial advisor is an important decision that requires careful consideration. By understanding your needs, doing your research, asking the right questions, and trusting your gut, you can find an advisor who will help you achieve your financial goals and provide peace of mind without requiring you to learn everything about finance!

That said, I would also check out this post if you're not looking for things like trust services or wealth management as a wealthy person.

If you enjoyed this article, check out our YouTube channel, LinkedIn page, or Instagram, OR (even better) subscribe to the newsletter by clicking below!

Click to Sub!

Click Me to go Home