Building Your Financial Future: 10 Tips for Choosing a Great Financial Advisor

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Choosing the right financial advisor is vital to securing your financial future. Do you know what credentials to look for or what questions to ask? Even knowing how to begin finding a professional can seem daunting.

If you’re ready to take the next step in building your financial future, then this article is for you!  Read further on these 10 helpful tips on how to find the best financial advisor. They can answer common money questions and help you reach your financial goals.

What Is a Financial Advisor?

The title “financial advisor’ applies to a wide range of professional services. These services can be provided either in person or by a digital service called a Robo-advisor. This general term can also apply to financial planners who meet specific qualifications.

In a nutshell, a financial advisor advises clients on how to manage their funds. The advisor researches the marketplace and recommends appropriate products and services available. They also ensure that their client’s know about products that will best fit their needs.

Human financial advisors can specialize in some or all the following areas:

Stockbroker or Broker

A broker or stockbroker will buy and sell stocks and other investments on behalf of their client. Brokers usually charge a fee, commission or both for their services. Brokers must be registered with the US Securities and Exchange Commission.

Investment Advisor

Investment advisors can be a multi-family office or single person who makes investment recommendations. They also analyze securities and find the value of individual stocks and bonds. These professionals are also registered with o the US Securities and Exchange

Enrolled Agent

An enrolled agent is a licensed practitioner who can represent a taxpayer before the IRS to review audits or appeals. Enrolled agents must pass a comprehensive test on preparing individual and business tax returns. They can also get their experience if they are a former employee with the Internal Revenue Service (IRS.)

Wealth Management Advisor

Wealth management advisors manage the assets of high net worth earners. These high net earners have over $1 million in liquid financial assets that they’ve built over time or acquired by sudden wealth. These professionals will also help clients with estate planning, investments and risk management.


Robo-advisors are a digital service that offer a simple, low-cost means to invest. Clients answer questions online and a computer algorithm builds your investment portfolio consistent with your goals. They also provide financial planning tools and advice on how to diversify your investments.

10 Easy Steps to Picking Your Financial Advisor

When it comes time to picking your personal financial advisor, follow these ten steps. You’ll get the guidance you need and not pay for what you don’t need.

1. Assess Your Current Fiscal Situation and Goals

Do you have a series of complex financial dealings worth millions on your hands? Or do you want financial advice for short terms tasks such as getting rid of debt? Your answers to these decisions will dictate whether you choose a Robo-advisor or human financial consultant.

Robo advisors can choose and manage your investment portfolio which lowers your overhead costs. Fees are as low as 0.25% of your total account balance. Most Robo Advisors don’t need any account minimums so you can begin investing with smaller amounts of funds immediately.

Human financial advisors are helpful when you need specific services like estate planning. These advisors will charge you around 1% of your total assets. Yet, these professionals are there for you when you’re making those big life changes like marriage or retirement.

2. Consider What Fee Structure Works Best for You

Financial consultant fees come in a variety of structures. A personal financial advisor may charge clients a fee based on a percentage of their portfolio value. Some advisors work with clients who have over $250,000 in investment-worthy assets within their portfolio.

These advisors are considered “fee-only” and don’t receive commissions for selling financial products. Fee-based advisors are subject to laws that state that they must put their clients’ interests before their own. Other financial advisors may charge flat fees or an hourly wage.

3. Research Basic Skills and Qualifications

Do your homework ahead of time and research the many professional financial advisor certifications that are out there. At a minimum, financial advisors are required to pass and have the General Securities Representative license. This tests is also called the Series 7 and covers basic investment knowledge and regulations.

Financial advisors must also have their Series 63 license. This license is also called the Uniform Securities Agent State license. This certification allows a personal financial advisor to serve clients throughout many states.

4. Ask Around for Preliminary Recommendations

You can start collecting names when you ask family, friends or colleagues for recommendations. Ask them if they are comfortable sharing their personal experiences with hiring a financial advisor. They may be able to help with an introduction for you when you’re ready to start interviews.

Another source you can tap is the Garrett Planning Network. They manage a website where potential clients can find listings of financial advisors when they click on a state.

5. Look for a Fiduciary Advisor

In 2016, the laws requiring advisors to act in their customer’s best interest were overturned in court. Today’s financial industry is now regulated by what’s called a “suitability” standard. This means that advisors only need to recommend what they think it’s “suitable” whether it’s at the lowest cost possible or not.

Some financial consultants, however, will follow fiduciary standards and continue to work in their customer’s best interests. If you are interviewing a potential financial advisory, ask them if they follow this standard.

6. Consider Other Licenses the Advisor Holds

There are many other certifications that financial advisors can hold that allow them to offer other products unique for any situation. A Series 3 license entitles the advisor to sell commodities and recommend investment options in alternative securities and commodities.

Most states require financial consultants to get their state’s health and life insurance licenses if they want to sell these products.

7. Research Disciplinary History

You can research an investment adviser or firm and see that’s entity’s professional conduct and background history at the US Securities and Exchange Commission’s (SEC) website. The Investment Adviser Public Disclosure website contains information on current employment history, disclosures and other disciplinary matters that involve these professionals.

Another site where you can research historic disciplinary events is the Financial Industry Regulatory Association (FINRA.) FINRA investigates grievances and takes disciplinary actions against those who violate federal regulations. Their Disciplinary Actions Database is accessible to the public and updated regularly.

8. Request a Quarterly Report

A financial advisor’s quarterly report can be a telling tale for you in terms of what their strategies are. These reports will show you the investments the advisor supports and any realized gain or loss from these sources.

When you’re ready to start interviews, ask them for a copy of their quarterly report. Ask them to describe the returns of their overall index. They should be able to tell you why they think their mix of assets and investments are a good idea.

9. Read Contracts Thoroughly

When it comes time to execute a contract with your chosen financial consultant, be sure to read your contract thoroughly. Your contract should spell out clearly what their fee structure. Some advisors may include alternative dispute resolution clauses. to address disputes you may have with their actions.

Your contract should also include language on whether they can represent you to make investments and you aren’t around. Check to see if your contract says you are interested in investing in speculative investments before you sign on the dotted line. Ask yourself if you’re comfortable giving them this level of independence to drive your portfolio.

10. Do You Have Rapport with Your Advisor?

A good financial advisor is one who can translate technical terms and concepts into language that you can understand. They are the professionals who can take these complicated words and break them down into what is understandable and relevant to you. If the advisor you’re interviewing can’t break down this industry jargon for you, they may not be the best fit.

Next Steps

Your first step is to decide if you want to hire a person or work with a Robo-advisor. Robo-advisors will charge lower fees. But there’s no denying the human touch when you need advice on these important decisions that a human advisor can give you.

Talk to your family and co-workers on whether they have any recommendations. You can also check the National Association of Personal Financial Advisors (NAPFA) for a listing of financial advisors in your area.

Don’t forget the check out our website for more investment and retirement planning advice. We’re here to help you preserve your financial future.

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