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Personal Finance

How to Choose a Financial Advisor (And Do I Even Have Enough Money to Need One?)

October 1, 2019

Most people who ask themselves if they need a financial advisor usually do require the assistance of an investment expert. A financial advisor’s job is to help their clients with financial planning, investments, and saving for retirement.

While not everyone needs the assistance of a financial advisor, if you have a certain amount of assets and are considering how they will fit into your financial future, working alongside a financial advisor could be the key to your success. This guide will help you learn more about the role a financial advisor plays. It can also help you learn more about what type of financial advisor you may need.

How Do You Know If You Need a Financial Advisor?

A trusted financial advisor can be a very useful person to have as your go-to. They can help to make complex matters such as buying or selling a stock for the first time, much easier to deal with. But how involved with investing should you be before you seek out the assistance of a financial advisor? Here are a few questions to ask yourself before you start looking for an expert to help you out.

  • Do you need to come up with a financial plan to guarantee your decisions will stay in line with your future financial goals?
  • Are you interested in investing, but are unsure about how to get started?
  • Have you recently received an inheritance and want to put the large sum of money to good use for yourself or your family?
  • Do you have questions about when to start planning for retirement or what steps to take to ensure you are financially stable during that time?

 If you answered “YES” to one or more of those questions, you could benefit from working with a financial advisor.

 How Can a Financial Advisor Help Me?

A financial advisor can help you by making sense of all these confusing and complex tasks. They are constantly researching the ever-changing financial industry and will examine your personal monetary situation to help you put together a plan that will work best for you. 

Additionally, these advisors have the knowledge and expertise needed to help you make the best decisions now that will help your money grow in the future.

These experts will help you put together a profile that will change and adjust over the years as your financial needs change. They can advise you on how to make the right adjustments to keep your retirement funds intact even if you are currently dealing with an unexpected financial issue. When you have an excellent financial advisor to guide you, they can help ensure that you will be prepared to retire as planned.

What is the Difference Between an Asset Manager and a Wealth Manager?

Wealth managers and asset managers are both very important resources to have on hand when you are planning your financial future.

A wealth manager focuses on how to come up with effective strategies for you or your family’s wealth over time. They deal with all the different financial aspects of your life, such as tax planning, managing your portfolio, planning for retirement and estate planning among other things.

An asset manager looks at the different investments out there and will make recommendations to you based on your current goals and your level of risk tolerance. In some cases, the firms that offer these services have brokers on staff who work as asset managers. These brokers earn commission on the investment products they sell.

While many of the tasks they perform are similar, there are a few major differences between asset managers and wealth managers.

  • Wealth management covers a much broader range in perspective than asset management. It can actually include asset management services along with investment management, tax planning, and real estate management.
  • Asset management is primarily related to the management of assets and investments. This includes stocks, bonds, and real estate.

Criteria to Look For When Choosing a Financial Advisor 

Choosing the right financial advisor to suit your particular saving and investing needs doesn’t have to be a difficult task. Before you decide to hire an advisor, it’s important that you find out how much they charge for their services.

Typically, most advisors will base their charges on a percentage of your assets under management. But you should also keep in mind there could be other fees involved. The one thing to keep in mind is to find out if an advisor is fee-only or fee-based.

Additional factors to keep in mind when choosing a financial advisor include

  • Determining how much help you need. Some advisors offer their clients hourly consultation appointments while others will charge a flat fee for comprehensive planning. This allows you to be in touch with them on a regular basis anytime you have a question or concern.
  • There are also several different credentials to consider when hiring a financial advisor. The CFP or Certified Financial Planner certification is often considered the gold-standard in the industry. If you are looking for the best of the best advisor to hire, you should look for one with a CFP. 

If you are ready to look for a financial advisor, there are several useful resources available online. The NAPFA (National Association of Personal Financial Advisors) is a great place to start. This is the leading organization in the country that offers access to fee-only advisors in your area.

Keep in mind that there are no rules set in stone when it comes to choosing the right financial advisor. You can follow the tips featured here for advice, but you will also need to speak to several advisors face-to-face before you know which one you feel comfortable with.

Being able to discuss your current and future financial needs with someone you can trust is one of the most important aspects of choosing the ideal financial advisor for yourself and your family.

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