Tips for Choosing the Right Financial Advisor

Tips for Choosing the Right Financial Advisor

Preparing for your financial future is a major responsibility. To help you prepare and invest, hiring a financial advisor could be a good decision. However, there are several factors that you need to take into consideration before choosing your advisor to make sure you make the best decision possible.


When you’re looking for a financial advisor, the first factor to take into consideration is whether the advisor is certified. You should look for a financial planner or advisor that has a CFP license and is also compliant with all SEC regulations. This will ensure that they have had all the necessary training and are in good standing with the SEC. All advisors should be able to provide you with evidence of their current standing upon request.

Compensation Structure

Before you agree to any contract with a certified financial advisor, you should make sure you fully understand the advisor’s compensation structure. An advisor will be paid an asset management fee that is based on the amount of money they are managing. However, you should look for an advisor that has a lower as a management fee. Instead of one that earns more based on the return-on-investment they provide to you. This will keep them motivated to maximize your return on investment. You will not have to spend as much in fees if they lose money.

Beware of Extremely High Returns

While you will want to have an investment advisor that has a strong track record. It is important that you are being cautious about giving money to anyone who boasts returns that are well in excess of market averages. If you find a financial advisor that is quoting a very high return for their managed assets, there is a chance that there could be fraud involved or that they simply have had one good year and have not yet proven that it can be maintained for a long period of time.


The fourth factor to consider when looking for an investment advisor is whether they have positive reviews and references. There are two sources from which you can obtain references. One way would be to complete research online. You should be able to get a pretty good indication of the overall feedback and experiences that clients have had in the past by reading reviews online. Another way would be to ask friends or family members whom they have used as investment advisors in the past to see if they have any recommendations for an advisor.

In conclusion, preparing for your financial future is very important and hiring an advisor to help you invest and plan could be a great option. However, there are several factors that need to be taken into consideration before you hire a financial advisor.