How can you find and choose the best financial advisor for your financial situation? In this article, we’ll help you learn if you need a financial advisor, explain the different types of advisors, how much advisors cost, and where you can look online to find your ideal financial advisor.
There are, quite literally, hundreds of thousands of financial advisors licensed in the US. These financial professionals and their firms may use the terms financial planner and financial advisor (interchangeably spelled adviser), among other titles you may see, including wealth manager, financial consultant, or financial analyst.
Some financial professionals may act more like salespeople pushing proprietary financial products with high fees like insurance policies, mutual funds, and annuities. Fortunately, you can usually find competent financial advisors at all reputable wealth management firms, but it’s important to know how to distinguish financial advisors who will put your best interests first versus others that may be more focused on their own bottom line.
Do I Need a Financial Advisor?
Before looking for a financial advisor, have you determined if you need one? To answer that question, you must decide what kind of help you need to make financial decisions and manage your finances.
First, take some time to consider the type of financial advice and guidance you are seeking. For example, start by asking yourself these questions:
- Do I need help with basic budgeting?
- What about saving? Investing? Retirement planning?
- What assistance do I need with income planning in retirement?
- Do I have enough life insurance?
- What estate planning services do I need?
- Do I need help with a financial plan to pay off my student debt or refinance outstanding loans?
Competent financial advisors come in many shapes and sizes. Deciding what you want them to do for you is the key to finding the right advisor. The answers to the above questions are where you should start. If you only require investment help, there are inexpensive options to consider. If you want a comprehensive financial plan covering all areas, that’s another type of advisor, often referred to as a financial planner.
The bottom line—Before searching for or interviewing any financial advisor, know your financial goals and what it is you want them to do for you.
Finding the Right Financial Advisor for You
Hiring an advisor or financial planner is a significant life decision you need to get right. Not doing so can cost you a lot of money and aggravation. Fortunately, you have more options today for finding the best financial advisor for you than your parents or previous generations.
Your choices are considerable with advisors who can work with you online, specialist financial advisors, robo-advisors, and local financial advisors with deep ties in the communities they serve.
Here are four traits we believe you should look for in a financial advisor:
- Fiduciary – Experience tells us that it is difficult to limit the conflicts of interest in wealth management firms with a sales culture. Instead, look for financial advisors who operate as a fiduciary, committed to putting their client’s interests first, not just in what they say but in how they serve their clients.
- Experience – An advisor’s experience is essential to making an informed and educated hiring decision. Even if you work with a younger or less experienced financial advisor, the best advisory firms have mentorship or apprentice programs to train their more junior advisors.
- Quality – Financial industry designations indicate an advisor’s commitment to a high standard of advice. The CFP designation (Certified Financial Planner) is the most accepted mark for those seeking comprehensive financial guidance from professionals committed to upholding a fiduciary standard. That’s not to say an advisor has to be a CFP to give good advice. However, a Certified Financial Planner agrees to uphold their fiduciary duty to always act in your best interest.
- Fee Structure – How consumers pay financial advisors for advice is a hotly debated area in the media and the financial services industry. There are several ways to pay for financial advice. Some ways advisors get paid are commissions, a percentage of assets under management, fees and commissions, and fee-only. We encourage you to learn more about the different ways you can pay a financial advisor.
Services a Financial Advisor Should Offer
The best wealth management firms and their advisors offer a wide range of services, from comprehensive financial plans to needs-based services. For example, maybe you only want a second opinion on your investment portfolio. Perhaps you want them to analyze whether it’s better to take a lump sum rather than income for your pension plan.
Or, at the other end of the spectrum are those who want a financial advisor who can help you set goals, help with budgeting, plan your retirement, and manage your investments. In other words, a financial advisor or planner who offers you a comprehensive plan.
You can expect most financial advisors to offer the following planning services:
- Free initial consultation
- Goal setting
- Cash flow and net worth analysis
- Retirement expense analysis
- Retirement income analysis
- Social Security analysis & recommendation
- Tax planning
- Life expectancy modeling
- Scenario modeling
- Retirement plan analysis (401(k), 403(b), 457, IRA, Roth, etc.)
- Investment account analysis and recommendations (asset placement)
- Detailed risk profile
- Portfolio Stress Testing
- Asset allocation recommendations
- Investment management
- Life insurance analysis and recommendations
- Health insurance analysis and recommendations
- Property and liability insurance analysis and recommendations
- Estate planning analysis & recommendations
- Implementation plan
- Multiple ways to meet (in person, phone, virtual, etc.)
Clients can choose the financial services they need and want. Good financial planning firms have a fee structure that allows them to do that at a reasonable fee.
Financial Advisor Compensation
There are several ways financial advisors make money.
- Commission only – advisors receive commissions on products they sell. That can be mutual funds, individual stocks and bonds, annuities, and other financial products. Having your advisor’s compensation based on what they sell you would not be the first choice.
- Fees and commissions – As the name suggests, your financial advisor gets paid on commissions of financial products sold and fees based on how much money they manage for you. That fee might be a percentage of the assets they manage, an hourly, or a flat fee. You may see these advisors referred to as “Fee-based.”
- Fee-only – In the fee-only model, you pay your advisor a fee for their services. The longest-standing fee-only model charges based on the amount of money invested with them. That eliminates many smaller investors who don’t have large enough portfolios to warrant the services they need. Firms that charge an hourly fee, flat fee, or a monthly subscription fee can service a much more extensive range of clients than the percentage of assets model.
- Advice-only – This relatively new form of compensation involves paying only for advice, not implementation. In other words, you pay a fee, often hourly or a flat fee arrangement, in exchange for advice from a financial advisor who will tell you exactly what stocks or investments to buy. Still, you will be responsible for opening a brokerage account at a firm like Fidelity and Schwab and conducting all transactions independently.
Your circumstances and expectations may be different from those of others seeking financial advice, so it’s important to consider which compensation model may be best suited for your particular needs.
What Type of Financial Advisor Should You Hire?
Deciding on the type of financial advisor you want to hire is where things can get tricky. There are several kinds of advisors to choose from, including fully digital advisors and traditional advice offered by financial professionals. Let’s review a few of the most popular types of financial advisors.
Robo-advisors
Everything seems to be going digital these days, but most robo-advisors that started off entirely digital have now expanded to offer human advisor support. Your financial advisor will likely offer certain digital services to manage your money to complement the services they perform themselves.
Robo-advisors are online advisory firms that offer digital investment advice through their website or a mobile phone app. Wealthfront and Betterment among the most popular. They often use an algorithm to build your portfolio and manage your investments, with access to human financial advisors to provide services beyond digital. After completing a short questionnaire to determine risk tolerance, most robo-advisors will develop a recommended investment portfolio and automatically invest your money on your behalf with your permission.
Robo-advisors frequently use exchange-traded funds (ETFs) as the building blocks of your investment portfolio. Most ETFs have lower costs than mutual funds, which can help your money compound faster. On top of the ETF costs, robo-advisors typically charge you a fee based on a percentage of the assets they manage for you. The typical annual fee varies from a low of 0.25% to as high as 1% (though rare).
Pros and Cons of Robo-advisors
Robo-advisors are among the lowest-cost money management available. If you are a DIY investor, you may save money versus paying a robo-advisor. However, you would build your own portfolio, do your own research, rebalance your portfolio yourself, and handle tax management. Most of the better robo-advisors do that as part of their services. Using a robo-advisor remains one of the lowest-cost ways to manage your investments.
The downside of robo-advisors is the lack of additional services. Competition forced many robo-advisors to expand their services beyond investment management so that you may find access to CFPs for an additional fee. However, the services offered by these professionals are generally limited in scope, and you may speak to a different financial advisor each time you call.
If basic investment advice is all you need, robo-advisors may be worthwhile.
A Traditional Financial Advisor
When most people think about a traditional financial advisor, the big-name wealth management firms usually come to mind – Merrill Lynch, Morgan Stanley, Edward Jones, JP Morgan Chase, and Goldman Sachs are among the most recognized. Beyond these household names, thousands of independent wealth management firms operate across the US, some with just one office reflecting the name of the firm’s founder and others that have grown to multiple offices and dozens of advisors.
If meeting in person frequently is important to you, it’s recommended to consider hiring a local financial advisor not far from home.
Advisors affiliated with wealth management firms may provide financial planning services as part of their offerings. If you work with a financial advisor at one of these firms, be sure you understand how they get paid. Conflicts of interest always exist, no matter the compensation model, but many advisors have taken steps to minimize conflicts.
For example, someone paid on commissions may feel pressured to sell investment products in which they get paid a higher amount. That’s not to suggest that they will do that, but it’s best to find someone with as few conflicts as possible. You should ask if the advisor will act as a fiduciary. Being a fiduciary means your advisor must act in their client’s best interests and follow a fiduciary standard. That may seem obvious, but ask to protect yourself.
A Virtual (Online) Financial Advisor
Like robo-advisors, many firms now offer online financial planning services. Rather than having in-person meetings, a virtual financial advisor will meet with you using an online videoconference service (e.g., Zoom, Teams, etc.). Virtual financial advice is becoming increasingly popular among people who want to avoid traffic headaches and commuting to meet with their financial advisor, which can consume valuable time you can enjoy spending with family or friends.
The best virtual financial advisors provide nearly identical services to traditional financial advisors and will offer similar pricing models to a traditional advisory firm.
A Specialist Financial Advisor
Thousands of financial advisors today specialize in working with clients who share common interests, occupations, religious beliefs, and more. By carving out a particular niche, these specialist advisors provide expert knowledge to deliver financial planning services and guidance tailored to the audience they serve.
Recommendations To Find a Financial Advisor
Numerous websites exist to help people find financial advisors online, including Wealthtender. Unfortunately, many find-an-advisor websites are outdated, and others simply scrape basic data from federal and state securities regulators, which offer little in the way of valuable insights.
On the other hand, the find-an-advisor resources below can help you find financial advisors for your particular circumstances based on the abovementioned characteristics – independence, quality, services, and fee structure.
Wealthtender is the industry’s first find-an-advisor website to feature online reviews to help you learn what clients of advisors have to say about their experiences.
XY Planning Network
The XY Planning Network is a national organization of over 1,500 affiliated independent financial advisors across the country who primarily serve Gen X and Gen Y clients.
They have a natural selection process that starts with what you’re looking for an advisor to do (a recurring theme). When you enter your criteria into a search box, the website next displays recommended advisors.
You can likely find a firm and advisor who lives near you. If not, all XY Planning-affiliated advisors can work with you online. All XY Planning financial advisors must be fee-only, and most have earned their CFP designation. They have no minimum requirements, and many advisors offer a flat fee, retainer, or subscription-based fee structure.
Garrett Planning Network
The Garrett Planning Network has been around since 2000. Like XY Planning, they require advisors to be fee-only, financial planning-focused firms. Searching for an advisor is also a smooth process. You can search by specialty like advice by phone or web, military experience, portfolio management, real estate investing, etc. Once chosen, the second choice breaks it down even further. For example, the options are engineers, legal, and medical professionals under the professional category.
Advisors agree to charge clients based on an hourly basis. They must also offer investment management services.
Wealthtender
Launched in 2019, Wealthtender offers a fresh approach to finding a financial advisor with easy-to-use directories and guides, along with online reviews which you won’t find elsewhere.
Unlike find-an-advisor websites that start by asking for your zip code, Wealthtender believes where you live should be a factor but not necessarily the primary factor in determining who you should hire.
For example, you’ll find financial advisors featured on Wealthtender who specialize in various categories, including:
- The field or industry you work in (e.g., technology, energy, real estate, medical professionals)
- The company you work for (e.g., Amgen, Apple, Walmart)
- Your age or life stage (e.g., Gen X, new parents, divorced, young adults, etc.)
- Investing specialties (e.g., crypto, alternative investments, ESG investing)
- Financial planning specialties (e.g., LGBTQ+, immigrants, college funding, etc.)
- ↗️ Search advisors by areas of specialization
And if you want to read online reviews of financial advisors to learn what their clients say about working with them, Wealthtender offers the industry’s first financial advisor review platform. (Believe it or not, the Securities and Exchange Commission (SEC) prohibited financial advisors from asking their clients to write reviews until recently.)
Are You Ready to Hire a Financial Advisor?
Choosing a financial advisor is one of the most critical decisions to help you plan for your financial future. Stories abound about consumers feeling misled by people calling themselves financial advisors. We hope this article guides you through the process of determining the right financial advisor for you.
Remember, it starts with what you want an advisor to do for you. Without that, you’re more likely to make the wrong decision. Following the process will help you make the right choice with the goal in focus.
You’ll find a growing number of financial advisors featured on Wealthtender. You can search based on the areas of specialization most important to you and where they’re located, or browse our financial advisor directory for more search options to find advisors who may be a good fit for you.
Find Your Next Financial Advisor on Wealthtender
📍 Click on a pin in the map view below for a preview of financial advisors who can help you reach your money goals with a personalized plan. Or choose the grid view to search our directory of financial advisors with additional filtering options.
📍Double-click or pinch pins to view more.
Seven Experts Offer Advice on How to Pick the Right Financial Advisor
Introducing the Pros
Here are 7 pros who responded (in alphabetical order):
- Brian Behl, CFP, CRPC, CDFA, Owner of Behl Wealth Management
- Jorey Bernstein, Executive Director, Wealth Manager, and Founder, Bernstein Investment Consultants
- Tim Eichhorn, Partner & Senior Advisor at Rather & Kittrell
- Douglas Greenberg, President, Pacific Northwest Advisory
- Scot Johnson, CFA, Principal & Chief Investment Officer at Adell, Harriman & Carpenter, Inc.
- Kevin Lao, CFP, Founder and Director of Financial Strategies, Imagine Financial Security, LLC
- Jon McCardle, AIF, President, Summit Financial Group of Indiana
Seven Experts Offer Advice on How to Pick the Right Financial Advisor
Some criteria were mentioned by multiple experts, while others were offered by just one. Here are seven tips, in descending order of number of experts mentioning them.
1. Credentials, Expertise, and Reputation
Behl suggests, “Work with a Certified Financial Planner (CFP). This is the minimum standard. It shows the advisor has a certain level of experience, ethical standards, and a clean background; and passed a certification test showing their knowledge.
“Also, make sure the advisor specializes in working with clients in situations similar to yours. If you want help with retirement income transition and minimizing taxes in retirement, find someone who focuses on those and has many clients in similar situations.”
Bernstein agrees, “Look for someone with expertise and experience in the areas you need help with (e.g., retirement planning, investments, taxes, etc.). Look for advisors with relevant professional certifications and years of experience advising similar clients.”
Eichhorn adds, “The prospective advisor’s competency is crucial. Ask questions and assess their responses. Also, ask if the advisor lives up to their promises of service.”
Greenberg mentions several additional certifications, “Look for recognized designations like CFP, Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC). These demonstrate a certain level of expertise and adherence to ethical standards. However, while certifications are crucial, years of experience in advising clients are also important.”
Johnson asks, “Are you looking for someone who can customize an investment portfolio for your unique situation? Do you need financial planning? Do you want tax and estate planning advice? Many advisors can help clients in each of those areas. Pick someone who offers the specific services you’re looking for and make sure you lay out exactly what you’re looking for in an advisory relationship from the get-go.”
Lao says, “If you’re 60+ and preparing to retire with a large 401k, it doesn’t make sense to work with an advisor who typically helps those in their 20s and 30s.”
McCardle also asks a question, “Do you see signs of success and experience when you meet and interact? I’d never take fashion advice from someone I feel doesn’t understand fashion.”
2. Communication and Listening Skills
Bernstein says, “An advisor should listen to your specific needs and explain financial concepts clearly. Make sure you feel comfortable and understood.”
Eichhorn feels strongly about this, “Do they listen to what you say? This one is paramount. They aren’t investing their money; they’re investing yours!”
Greenberg agrees, “An advisor should be clear about their investment approach, be readily available to answer queries, and keep you informed about any changes or decisions.”
Johnson also suggests, “Work with an advisor who communicates clearly and at a level that makes you feel comfortable.”
McCardle adds, “Does the advisor offer advice after asking questions and hearing your answers, considering your full financial picture, or do they offer advice without attention to how it will affect your overall picture?”
3. Fiduciary Duty
Behl says, “If someone won’t give you advice that’s in your best interest rather than their own, run away!”
Bernstein equates this with trustworthiness, “You want an advisor you can trust to act in your best interests, not just sell you products. Look for fiduciary advisors who’re obligated to work for your benefit.”
Greenberg agrees, “A financial advisor with a fiduciary duty is obligated to act in the best interests of their clients, even if it doesn’t align with his or her interests. It’s crucial your advisor is committed to placing your interests first.”
Johnson reiterates this, “Work with a fiduciary, someone who’s duty-bound to act in your best interest. A fiduciary will look out for you first and foremost.”
Lao also agrees, asking, “Does the advisor disclose any conflicts of interest and have your best interests at heart? Better yet, does the advisor avoid conflicts of interest altogether by being a fiduciary?”
4. Compatibility
Greenberg says, “Your financial advisor should understand your goals, risk tolerance, and financial situation. You should feel comfortable discussing money matters with them.”
Lao puts it like this, “When finishing a meeting with your advisor, do you feel better or worse about your situation? If you regularly feel worse or pessimistic after meetings, it’s time to find someone new!”
McCardle stresses, “Fit means more than you may think. Being comfortable to share your fears and insecurities about your present financial condition is critical. Choose someone who’ll speak with you, not at you! Someone who doesn’t need you as a client.”
5. Compensation Method
Behl encourages you to “Find a fee-only advisor. Someone who’s only paid by clients, who doesn’t get commissions or kickbacks for selling products like insurance or annuities.”
While not included in the above list, Ramit Sethi famously pushes his audience to hire just fee-only advisors who charge a flat fee or hourly, never a percentage of “assets under management” (AUM).
6. Honesty and Accountability over Comfort
McCardle asks, “Is the advisor honest, or does he try to make you feel comfortable? Honesty is tough but beneficial. Being comfortable when the truth is uncomfortable is overrated, temporary, and rarely beneficial. Does the advisor become your partner and hold you accountable?”
7. No Nickel and Diming
McCardle says, “A good advisor should be more concerned with how their advice impacts your situation than getting paid. In other words, can you call without having to worry you’ll get charged each time you talk?”
As good advisors should, Behl says, “I highlight [my recommended] criteria during all my introductory calls with prospective clients and encourage them to find an advisor who fits this description for them, even if it isn’t me.”
Should I choose a financial advisor who is wealthier than me?
This question is answered below by Opher Ganel, a contributing writer to Wealthtender, who incorporates feedback from the following financial professionals:
- Brian Behl, CFP, CRPC, CDFA, Owner of Behl Wealth Management
- Jorey Bernstein, Executive Director, Wealth Manager, and Founder, Bernstein Investment Consultants
- Tim Eichhorn, Partner & Senior Advisor at Rather & Kittrell
- Douglas Greenberg, President, Pacific Northwest Advisory
- Scot Johnson, CFA, Principal & Chief Investment Officer at Adell, Harriman & Carpenter, Inc.
- Kevin Lao, CFP, Founder and Director of Financial Strategies, Imagine Financial Security, LLC
- Jon McCardle, AIF, President, Summit Financial Group of Indiana
I share my own opinion below on whether you should choose an advisor who is wealthier than you, but I’ll start with the experts.
Behl says, “I don’t necessarily agree with this. I give great advice to clients with a net worth of $5 million or more, while my personal wealth isn’t quite there yet.
“You want someone who makes good financial decisions for themselves (not spending more than they make, not digging into credit card debt, saving for their own goals, etc.), but I don’t think they need to be wealthier to give very good advice.”
Bernstein agrees, “An advisor doesn’t have to be wealthier than his/her clients. While an advisor’s financial success can be a positive sign, it doesn’t guarantee he/she is the best advisor for you. The most important factors are their qualifications, ethics, experience, and ability to communicate well with you.
“Wealth alone doesn’t determine whether someone will provide sound financial guidance tailored to your situation. Many knowledgeable advisors can effectively advise clients even if they have fewer assets themselves. The key is evaluating their competency and fit for you based on the criteria above, not their net worth.”
Eichhorn puts it succinctly, “The best advisors think with your wallet, not theirs. They may or may not have more money than you. You shouldn’t be able to tell.”
Johnson offers an example where an advisor’s high net worth could mislead you, “I don’t know that you need to work only with advisors who’re wealthier than you are. They may simply have been fortunate enough to inherit money!”
Lao adds, “I’m 36, so naturally all my clients over 60 have a higher net worth. I rely on my experience helping hundreds of others, many wealthier than the prospective client at hand. However, I agree advisors should follow their own advice. I happily share my financial plan with any client who asks to show them I practice what I preach.”
We’ll finish up with Greenberg, who offers a nuanced answer, “The idea that ‘One should never take financial advice from someone with less money than you’ is catchy but oversimplified.
“Wealth Isn’t the only indicator. An advisor’s wealth doesn’t necessarily indicate their expertise, ethics, or ability to manage clients’ finances. Some of the best advisors might choose to live frugally, regardless of wealth, or they may be early in their careers, not having amassed wealth yet.
“Different clients have different needs. An advisor specializing in helping younger clients or those with less money may not be wealthy herself but can still provide valuable advice. On the other hand, an advisor accustomed to high-net-worth clients might not be the best fit for someone just starting to invest.
“Conflict of interest is also important. An overly wealthy advisor, especially if their wealth comes from commissions, might have a conflict of interest. It’s essential to understand how the advisor earns his income — through flat fees, hourly rates, or commissions.
“In conclusion, while an advisor’s financial status may provide some insight, it’s far from the most important consideration. Instead, focus on qualifications, commitment to your best interests, and compatibility with your financial goals and values.”
My Take on Advisors’ Net Worth as a Metric for Hiring a Financial Advisor
First, I understand why someone might want their financial advisor to be wealthier than they are.
You may feel more confident advisors are good at what they do if they can point to their own wealth as proof.
However, a wealthy advisor could potentially be a sign of trouble, e.g.:
- They may be overcharging.
- They may be putting their own enrichment ahead of your best interests.
- They may not pay their taxes in full.
- As mentioned above, they may have inherited a lot of money, and if their current fortune is smaller than it was, that would imply they aren’t good with money.
- They may have been unsavvy enough to buy lottery tickets but happened to hit the jackpot.
Does this mean a wealthy advisor should be avoided?
Not at all.
However, being wealthier than you shouldn’t be a primary consideration.
