Choosing a financial advisor is one of the most important decisions that you will make in your lifetime. Your money is obviously important to you and you have worked hard to save it over the course of your lifetime. When it comes to deciding how to save, invest and plan, you will want sound and unbiased advice that you help you achieve your goals. At the same time, you want to ensure that you get the service you require without paying for anything more than you need. After reading this, you can begin to understand why this is no easy choice. Below are some considerations that you will need when selecting the right financial advisor.
The process of selecting a financial advisor will involve some background research as well as taking stock of what you are seeking. In this regard, there are two different things that you will need to do at the outset. The first is to analyze what your priorities are and what is important to you. This will dictate the type of advisor that you are seeking. If you have certain financial needs, you may gravitate to a certain kind of advisor. Write out a list of the things that are critical and the qualities that you need in a financial advisor. Then, put it down and come back to it when you are looking at specific advisors.
There are several primary different types of financial advisors that are available to you. It used to be that you generally had the main choice of the traditional financial advisor. This was the in-person presence with a physical office that you would go visit or would see you in your kitchen. There was generally one level of service, and you paid the full-service price. However, the advent of new technology has changed the options that are available to you. With that in mind, here are the types of financial advisors from which you can choose:
Now that you are familiar with the types of advisors that are out there, you should consider your own situation and how it fits into the types of services that are available. The first need that you need to figure out is exactly what services you need. It does not make sense to pay for a full-service financial advisor if all you need it the basics. At the same time, you do not want to miss out on vital services because you are trying to minimize your costs. In other words, you must figure out exactly what it is you need from a financial advisor.
Then, you need to understand the differences in costs between the types of financial advisors. Of course, robo-advisors will cost you the least because that type of advisor will have the lowest amount of human interaction and will be more automated. Robo-advisors will usually cost you a quarter of a percent of the assets that you have under management. An online financial advisor will cost you more. Their charges vary and can be a flat annual rate or a percentage of your assets that is higher than a robo-advisor would charge.
When you are dealing with a traditional financial advisor, there are varying fees depending on the advisor. Some advisors will cut their rate if you have a larger amount of money under management with them. Usually, the average fee charged by these advisors will be one percent of assets under management. However, some advisors may charge more than this based on their skill and the level of service provided. Additionally, you may pay more than one percent for a traditional advisor if you have a smaller account.
Once you know the type of advisor that you need, you will then need to select either the individual advisor or the type of solution that you want. Here are some considerations when selecting a robo-advisor:
If you are considering the traditional investment advisor route, it is essential to get to know the advisor and learn as much as you can about them since they will be making decisions and giving critical advice that affects your financial well-being. Here are some things that you will want to look into when you are considering a specific investment advisor:
These are just some of the many questions that you should ask. Choosing a financial advisor is something that should be taken seriously because the wrong financial advisor can derail your financial plan. At the same time, choosing the right financial advisor can help you secure your financial goals while reducing the stress that comes with managing your money. You should err on the side of doing more research than less because you can never be too informed when it comes to your money.