Woman having a serious conversation with a financial advisor

6 tips for finding the right financial advisor

A financial advisor can help you navigate the finer points of money management in your 20s and 30s, but choosing one is no easy feat. After all, you want to connect with someone who’s knowledgeable about the types of financial challenges you may be facing now, but who’s also capable of guiding you through your 40s, 50s and beyond. Besides finding an advisor who possesses the right know-how, it’s also important to choose one you can trust.

Asking the right questions can make it easier to narrow down the field. As you interview prospective advisors, here are the most important topics to cover.

1. What services do you offer?

The way you approach managing your money in your 20s or 30s isn’t going to be the same as someone who’s closer to retirement. Part of finding your match in a financial advisor is choosing one who understands where you’re at financially and where you want to go next.

For example, some advisors may focus solely on investments. That’s great if you need advice on choosing mutual funds, stocks, and exchange-traded funds (ETFs) but maybe not so useful if you’re also looking for help with developing a retirement strategy or minimizing your taxes (most advisors are not able to market themselves as tax advisors unless they have the certified public accountant designation and fulfill other criteria).

2. What are your professional credentials?

Financial advisors don’t all come from the same mold. Some have professional designations that signify their specialization in a particular area. These include certified public accountants (CPAs), certified financial planners (CFPs), and chartered financial analysts (CFAs). This alphabet soup can be confusing but essentially, these designations refer to a specific license that the advisor holds and the kinds of services they offer.

A CPA, for example, would specialize in taxes and accounting. A CFP is someone who’s specifically trained to work with individual investors to create financial plans. A CFA would focus on portfolio management for institutions, instead of individuals.

Knowing what these various certifications mean can steer you towards an advisor who has experience dealing with the issues or questions you’re most likely to have. If you’re ready to get serious about building wealth, for example, a CFP could be appropriate in the early stages.

3. What type of client do you specialize in?

While a wealth advisor can’t disclose specific details about their clients (if this happens, consider it a red flag!), they should be able to give you a general idea of the type of people they work with most often. Some may cater to young newlyweds, single women or divorcees while others may concentrate on retirees. Think about which life stage you’re in. If your advisor seems clueless about the challenges of paying down student loans while saving for retirement, for example, you may want to take a pass in favor of someone else.

4. How do you like to communicate?

Good communication is vital when you’re putting your trust—and your finances—in the hands of an advisor. Ask a prospective advisor how they prefer to communicate and how often they stay in touch with their clients. If you email them with a question or concern, how long are you likely to have to wait for an answer? How often will they update you on what’s happening with your account? Knowing that they’ll be there when you need them can work wonders for your peace of mind.

5. What’s your fee structure?

Financial advisors typically fall into two broad categories: fee-based or transaction (commission) based. That’s a big difference that you need to understand. A commission-based advisor charges their clients a fee for each transaction – such as purchases of mutual funds and annuities.

A fee-based advisor, on the other hand, typically charges a fee, such as one percent annually for the assets under management and there is no additional charge for commissions from trades. Knowing the difference is important because it can determine how much you’ll spend on advisory services.

6. Why should I decide to work with you?

The way an advisor answers this last question may end up being the most telling. This is their opportunity to sell the qualities or characteristics that make them unique. If you get the sense that they’re rattling off their response from a script or their answer doesn’t align with your values and goals, that may be a signal that it’s time to look elsewhere for financial advice.

Take your time and do your homework

Rushing into a decision can be a mistake if the advisor you choose is a mismatch. Don’t be afraid to ask these and any other questions that may come to mind while talking with an advisor, even at the risk of sounding silly. When it comes to choosing someone to help manage your finances, the extra investment of time may be well worth it.

If you’re ready to speak with a wealth advisor about shaping your financial future, contact us today.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.