What Are the Characteristics to Look for in a Financial Advisor?

Consumers are helped by financial advisors to manage their finances and achieve their financial goals. They may assist with all elements of financial planning, from investment management to budgeting advice to estate planning.IIt’s critical to find the correct financial advisor for your position so you don’t end up paying for things you don’t require or working with someone who isn’t a good fit for your financial objectives.

1. Determine which financial services you require

Ask yourself the following questions to figure out why you’re seeking financial assistance:

  • Do you require budgeting assistance?
  • Do you need assistance with your investments?
  • Do you want to put together a budget?
  • Do you need to update your will or form a trust?

Your responses will help you figure out what kind of financial advisor you’ll need. If you just need some help with investing, a robo-advisor can do it for you for a small cost. If you have a complicated financial situation, you may wish to consult with a financial expert, either online or in person.

2. Figure out which financial advisors are on your side

Investment advisors, brokers, professional financial planners, financial coaches, and portfolio managers are all terms used to describe financial advisors. Financial therapists are also available. So, who is responsible for what, and who can you trust?

Don’t assume that someone who uses an official-sounding title has any specific training or credentials because several of the most frequent titles advisors use, including the word “financial advisor,” aren’t related to any specific credentials.Anyone who gives investment advice (which most financial advisers do) must be registered as an investment advisor with either the SEC or the state, depending on the amount of money they manage.

Some financial advisors owe their clients a fiduciary obligation, which means they must operate in their clients’ best interests rather than their own. Always engage with a professional, registered fiduciary, preferably one that is fee-only, meaning you pay the advisor directly rather than through commissions for selling specific investment or insurance products. As part of their accreditation, certified financial planners have a fiduciary duty to their customers.

3. Find out about the many types of financial advisors available.

Financial advisors aren’t merely found in your local bank or advice office. Financial advice can be obtained in a variety of ways. Your personal tastes, the services you require, and your budget will all influence which option is best for you.


A robo-advisor is a digital service that simplifies and lowers the cost of investing. Computer algorithms design an investing portfolio depending on your objectives and risk tolerance after you complete online surveys.

Low cost: Fees start at 0.25 percent of your balance, and many services have no or low account minimums, allowing you to begin investing with a little amount of money.

When you need assistance investing for financial goals such as retirement but don’t want or can’t afford a full financial plan, this is a good option.

If you require more thorough financial planning, look elsewhere. While some robo-advisors specialise in higher-level financial planning, the majority thrive at straightforward investment management.

Financial planning services and advisors are available online.

An online financial planning service that provides virtual access to human financial advisors is the next step up from a robo-advisor.

A basic online service might provide the same automatic investment management as a robo-advisor while also allowing you to consult with a team of financial advisors when you have questions. More comprehensive services, similar to traditional financial advisers, include: You’ll be paired with a human financial advisor who will manage your investments and collaborate with you to develop a comprehensive financial strategy. Many online financial advisors may connect you with a top-tier credentialed advisor, such as a certified financial planner.

Online financial planning services are often less expensive than traditional financial advisors but more expensive than robo-advisors. Some services need a minimum investment of $25,000 or more, while others have no such requirement.

When you want holistic financial planning services like estate planning, retirement planning, or help with company stock options but don’t want to meet with an advisor in person. Many online adviser markets, such Harness Wealth and Zoe Financial, as well as many online advisors themselves, handle the verification for you.

If you’d rather work with an advisor in person, go 


Financial counsellors in the traditional sense

Traditional financial advisors are available to meet with you in person and assist you with all of your financial planning requirements.

High cost: This is frequently the most expensive option. Traditional advisors often charge 1% of your assets under management. Some advisors have a high minimum asset requirement, such as $250,000 in assets.

When you need specialist services, your situation is complicated, and you want to meet your financial advisor in person and build a long-term relationship with them, this is a good option.

If you want identical services for less money, prefer to seek guidance online, or don’t want to vet a possible advisor yourself, go elsewhere.

4. Think about how much you can pay an advisor

Although financial counsellors have a reputation for being expensive, there is a solution for every budget. Before you commit to services, it’s critical to know how much a financial advisor costs. In general, there are three cost levels that you’ll come across:

Robo-advisors frequently charge an annual fee based on a percentage of your account balance. Fees for robo-advisors typically start at 0.25 percent of the assets they manage for you, with many top providers charging as little as 0.50 percent. 0.25 percent of a $50,000 account balance equals $125 per year.

Online financial planning services and advisors often charge a fixed fee, a percentage of your assets, or a combination of the two. Personal Capital, for example, charges 0.49 percent to 0.89 percent of assets under management annually. Facet Wealth charges a yearly fee that starts at $1,800 and increases depending on how complicated your financial position is. Portfolio management and financial planning are included in both costs.

Traditional financial advisors often charge a proportion of the assets they manage, with a median fee of 1%, however this can vary depending on the size of the account. Others may charge a retainer, a flat cost, or an hourly rate.

The amount you should pay on a financial advisor is determined by your budget, assets, and the degree of advice you require. If you have a small portfolio, an in-person advisor may be overkill; a robo-advisor will save you money while providing the counsel you require. A robo-advisor may not be able to help you if you have a difficult financial condition.

5. Look into the background of the financial advisor

You’ll need to vet a typical financial advisor if you decide to deal with one. Check to discover whether they have any certifications they claim to have and if they’ve had any disciplinary issues, such as fraud. If you deal with an online financial counsellor, it’s not a bad idea to do this as well, but most will.

When is it appropriate to seek the advice of a financial advisor?

You can seek financial assistance at any time, but it’s especially vital to do so before making major life changes. Whether you’re purchasing a house, beginning a career, getting married, or having a child, these life events can have significant financial consequences, and a little forethought can go a long way toward ensuring a secure financial future.

If your financial status has altered, it’s also a good idea to consult a specialist. Perhaps your pay has increased or you have received a gift from a relative. When money begins to flood in, it’s a good idea to focus it in a positive way; otherwise, it’s all too simple to overspend.

Why is it that the word “advisor” is sometimes written “adviser”? Is there a distinction?

While the terms are frequently interchanged, “adviser” is the legal term used under the United States Investment Advisers Act of 1940 to refer to individuals who must register with the 

Today, the word “adviser” is usually written “advisor.” The key message is that the world of financial experts and their titles can be opaque; regardless of someone’s title, you should inquire for their credentials, verify them, and make sure their professional designations align with your needs.

I’m looking for free financial guidance

Many banks and brokerages give free online libraries of financial advice and tools, so inquire with your current financial provider. Some groups, such as the Foundation for Financial Planning, provide free financial planning assistance to persons in need, such as veterans and cancer patients. While you shouldn’t accept everything you read on the internet, there are many of reliable financial resources available, including government resources such as Investor.gov and the Financial Industry Regulatory Authority. Check out our guide to getting started for additional information.

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