In the U.S., there are countless individuals who claim to offer financial advice. These professionals often use titles like financial planner, financial advisor (or adviser), wealth manager, financial consultant, or financial analyst. Unfortunately, many of them are essentially salespeople promoting products like insurance policies, expensive mutual funds, and annuities. While competent financial advisors do exist, the sales-driven culture in many companies can be problematic.
So, how do you find the right financial advisor for your needs? This article will help you figure out if you need a financial advisor, explain the different types, their costs, and provide some top recommendations for finding one online.
First, determine if you actually need a financial advisor. Think about the kind of help you need with your finances. Do you need investment advice? Or are you looking for a comprehensive financial plan that covers everything? Knowing your financial goals is crucial before you start searching for an advisor.
Hiring a financial advisor is a big decision that can have significant financial implications. Luckily, there are more options today than ever before, including online advisors, specialists, robo-advisors, and virtual financial advisors.
Here are four key traits your financial advisor should have:
1. They should offer a range of services, from comprehensive financial planning to specific needs-based services.
2. They should help you set goals, budget, plan for retirement, and manage your investments.
3. They should offer planning services that you can choose from based on your needs.
4. Their fee structure should be reasonable and transparent.
Financial advisors can make money in several ways, but many people find the fee-only model to be the fairest. This model isn’t tied to how much money you have to invest.
Choosing the right type of financial advisor can be tricky. Options include digital advisors, traditional advisors, and robo-advisors. Robo-advisors, like Wealthfront and Betterment, use algorithms to manage your investments and typically charge low fees. They’re a cost-effective option if you only need basic investment advice, but they lack additional services.
Traditional financial advisors work at well-known firms like Merrill Lynch, Morgan Stanley, and Goldman Sachs. These advisors may offer financial planning services, but it’s important to understand how they get paid to avoid conflicts of interest. Make sure they act as fiduciaries, meaning they must act in your best interest.
Virtual financial advisors offer similar services to traditional advisors but meet with you online, saving you time and hassle. Many financial advisors today specialize in serving specific client groups, providing tailored advice and services.
Several websites can help you find a financial advisor. The XY Planning Network, Garrett Planning Network, and Wealthtender are three top recommendations. These platforms offer easy-to-use directories and guides to help you find the best advisor for your needs.
Choosing a financial advisor is a critical decision for your financial future. Start by knowing what you want an advisor to do for you. This will help you make an informed choice and find the right advisor to meet your financial goals.