Deciding to work with a financial adviser is a big decision. After all, a money specialist is someone you will have in your life, managing your finances, well into the future. There are various steps to take in order to pick the best professional for your particular situation. Follow these recommendations to find a financial adviser worth her or his weight in gold.
Understand the kinds of financial advisers
First, you need to decide whether you want a human adviser or feel comfortable with a robo adviser. Robo advisers were launched in 2008, and they expand the possibilities for a wider range of investors. Those with limited assets as well as young investors may benefit from automated money advice. Robo advisers are generally less expensive than human specialists.
Online services give you virtual contact with a human money manager but generally at a lower cost than in-person services. Online financial specialists can develop a complete financial plan for you.
Traditional face-to-face financial planning is a good option if you have a complex financial situation, want specific services, or prefer looking your asset manager in the eyes.
Pinpoint what type of advice you need
Are you interested in retirement planning, asset accumulation, or a holistic money plan that involves savings and insurance? Before you hire a financial specialist, determine your needs and expectations. There are three main categories of financial services.
- Financial planning—An overall assessment of your financial situation, where you want to go with your money, and ways you can get there
- Retirement planning—Creating a plan using all the options available to you to help give you a paycheck throughout your life
- Investment guidance—Help in choosing the wisest investments for your situation and managing them
Look for a financial professional who offers the services you require.
Research your options online
The internet is a great tool for those researching potential financial advisers. Consumers can look up everything from reviews to professional experience using data sources, like this page about Fisher Investments. Reading facts about this independent money manager or others you are considering gives you valuable background information that can help you make an informed decision.
Consider qualifications and professional history
Before you turn over your assets to anyone, check out qualifications and work backgrounds. Check for complaints, the nature of the complaints, and how the situation is being or was resolved.
Look for specific designations that show professional expertise and industry dedication.
- CFP®, or Certified Financial Planner™
- CFA®, or Chartered Financial Analyst
- PFS, or Personal Financial Specialist
You should also look for a Form ADV, a disclosure statement for firms and individuals in the money management industry. Reputable asset managers such as Fisher Investments are easy to research.
Consider the costs
Before making a final hiring decision, think about fee schedules and how financial advisers get paid. Some advisers are fee-only professionals, meaning they do not earn commissions. These types of advisers often serve as fiduciaries, who are ethically compelled to put your best interests first while managing your assets. This type of service may cost a bit more, with higher fees for smaller accounts and smaller fees for larger asset holdings.
Other money professionals get commissions or hourly rates. In some situations, these types of compensation can be more cost-effective in the long run.
Virtual human services are generally more affordable, often charging a set fee, a percentage of your account holdings, or sometimes both. Robo advisers are the most cost-effective option, commonly charging an annual fee ranging from 0.25% to 0.50%.
When choosing a financial adviser, there are specific points to consider. Fee amounts, certifications, and background are a few. Online research makes finding the best money manager easier. Seeking out the right financial professional today can help you have peace of mind in the future.