How Do I Find a Financial Advisor? (2024)

A financial advisor can help you with a one-time need, such as developing a financial plan, or they can be more of a long-term financial guide. “Financial advisor” is a term that applies to a number of professionals, including financial planners, investment managers, and financial coaches. It’s worth noting that there’s no general licensing or certification requirements for financial advisors, although specific professionals may need to meet certain requirements.

For these reasons, it’s best to take your time finding one and use your goals, peer recommendations, an advisor's background and their fees structure as guiding pillars.

Evaluate Your Financial Situation

Before you hire a financial advisor, give some thought to what you want a financial advisor to do for you. For instance:

• Are you seeking help with your retirement plan? A financial advisor should be able to guide you toward making choices about investments and other retirement issues that’ll put you on the road toward a satisfying retirement.
• Are you confused about whether to invest in stocks, bonds, mutual funds, exchange-traded funds (ETFs), or something else? A financial advisor may be able to clear up any investment questions you’ve got.
• Are you drowning in debt? If you’re feeling overwhelmed by credit card and student loan debt, you’re certainly not alone. A financial advisor can often offer advice besides what to trade, such as ways to pay off your debt, that will enable you to resolve your debt dilemma.
• Are you striving to achieve a short-term financial goal? Let’s say you want to save money for your child’s college education or buy a second home on the beach. A financial advisor may be able to help you prioritize the steps you need to take to realize that goal.
• Are you puzzled about your taxes? Unless you’re a financial whiz, the thought of tackling tax issues on your own can be, well, taxing. A financial advisor might be equipped to help take the mystery out of taxes.
  

Understand Your Budget

As you’re thinking about hiring a financial advisor, take into account how much it will cost to use their services. The amount can vary widely depending on the services being provided.

A financial advisor might, for example, charge a one-time fee of $2,500, an annual retainer fee of $4,000, or an hourly fee of $250. Or they might charge a percentage fee, such as 1% for managing assets worth up to $1 million. If you’re working with a financial advisor who’s buying and selling investment products on your behalf, they might receive a fee equal to 1% to 2% of the transaction value, or they might charge a flat fee.

To pay for a financial advisor, you might tap your checking account, dip into your savings account, or use a credit card. Be sure to ask a financial advisor whether they offer a payment plan.

Do Your Research

If you’re going to entrust your financial well-being to a financial advisor, it’s smart to do your homework. What type of advisor do you need? How do you know they’re reputable?

Decide on the Type of Advisor You Need

When you shop around for a financial advisor, pay attention to the services they provide. The types of financial advisors you’ll come across include:

• A fee-only advisor, such as a financial planner, makes money by charging fees for their services. They don’t earn commissions on investment products they buy and sell on a client’s behalf.
• A fee-based advisor, such as a stockbroker, earns a commission on investments being bought and sold. They also might charge an hourly fee, flat fee, or percentage fee.
• A commission-based advisor, such as an asset manager, earns fees solely from the sale of investment products and services.
• A registered investment advisor can be an asset manager or investment manager. The ways in which they make money include charging a percentage fee or an hourly fee.
• A robo-advisor is a digital platform that automates investment decisions based on a client’s input.

Verify a Financial Advisor’s Background and Credentials

Another factor that goes into selecting a financial advisor is their reputation. If they’re licensed or certified, it’s fairly easy to investigate their background and credentials through an online search. Here’s how.

• The Financial Industry Regulatory Authority (FINRA) BrokerCheck tool allows you to research a stockbroker or any other professional who buys and sells investment products.
• Take advantage of the Investment Adviser Public Disclosure tool from the Securities and Exchange Commission (SEC). With this database you can investigate an investment advisor’s background.
• Use the SEC Action Lookup tool, which provides details about any investment professional who’s been named in an SEC court case or administrative case.
• Contact your state’s securities regulator. Visit the website of the North American Securities Administrators Association (NASAA) to look up the securities regulator in your state. A state securities regulator oversees certain investment professionals.
• Take advantage of the Verify a CFP professional tool. Here, you can check whether a certified financial planner (CFP) actually holds certification. Keep in mind that not all financial planners hold the CFP designation.
• Search the Better Business Bureau’s list of accredited financial consultants.
• Look at a financial advisor’s website and social media presence, as well as online reviews about them.

Consider What Services You Need

Financial advisors offer an array of services. Consider which ones you need before hiring an advisor. They include:

• Investment strategy
• Insurance recommendations
• Retirement planning
• Tax planning
• College planning
• Estate planning
• Debt management
• Budgeting help
  

Where to Look for a Financial Advisor

Among the ways you can look for a financial advisor are by:

• Visiting the website of the National Association of Personal Financial Advisors (NAPFA)
• Using the Certified Financial Planner (CFP) Board of Standards tool for finding a CFP
• Seeking recommendations from relatives, friends, colleagues, and other people you trust
• Getting a referral from someone at your bank or credit union
• Asking a professional whose services you already use, such as your accountant or attorney for recommendations
• Reviewing Investopedia’s list of the country’s top 100 financial advisors

Questions to Ask a Financial Advisor

So, how to find a financial advisor you can trust? Once you’ve zeroed in on a few that you’re interested in hiring, you should prepare a list of questions to ask each of them. Here are 12 good ones.

1. What services do you provide?
2. What are your areas of specialty?
3. Are you a fiduciary? (A fiduciary manages money on someone else’s behalf and must act in their clients’ best interest.)
4. How would you describe your investment philosophy?
5. What are your fees?
6. What will the total cost be for using your services?
7. Do you offer a free first-time consultation?
8. What is your professional experience?
9. What licenses or certifications do you have?
10. Have you ever been sued or disciplined over something related to your work as a financial advisor?
11. What types of clients do you have?
12. How do you like to communicate with clients?

The Bottom Line

Hiring a financial advisor is a big step in your financial life, whether you need assistance with retirement planning, investment strategy, or debt management. Because of the vital role that a financial advisor can play, it’s best to take your time finding one. Before making your choice, review your financial goals, seek recommendations, investigate an advisor’s background, and ask about the advisor’s fees.