What to Look For in a Financial Advisor

Written By Mary Beth Eastman
Last updated November 28, 2017

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November 28, 2017

Simple. Thrifty. Living.

The term “financial advisor” can be confusing. For one thing, it is possible for practically anyone to brand themselves as a financial advisor. However, with some information about what to look for, you should be able to find an advisor to serve you well.

It should already be a given that financial advisors, financial planners, investment advisors and the like should act in your best interests. In other words, the advice they give you should be based on what benefits you most and not on whether it means more money or commissions for them. Unfortunately, many financial advisors do not follow the fiduciary rule.

Rather, they follow the suitability rule. As long as an investment or piece of advice suits you okay, it is fine to recommend even when something else would be a better move for you.

Due to a new law, it is possible that most financial advisors will have to follow the fiduciary standard beginning in July 2019. It’s also possible this date will be pushed back, as it has been before. In general, ask potential advisors, “In which areas are you not held to a fiduciary standard?”

If you prefer online contact, then you might want a financial advisor who is internet-savvy and who offers features such as live chat and text messaging. On the other hand, if you prefer in-person meetings, you may want an advisor close to your home or workplace. Going beyond that, though, you know how complex your financial matters are. In an especially complicated situation, does it make sense that one financial advisor would suggest meeting only once a year versus throughout the months as a plan is implemented? If you ever feel like an advisor is being dishonest or not transparent, go with your gut feeling and look elsewhere.

Above all, you don’t want a financial advisor who intends to get overly involved and who suggests that your circumstances are so complicated that you’ll never be able to handle anything on your own in the future.

Your chances of working with an advisor who has your best interests at heart go up when he or she charges a flat fee. This fee is agreed on beforehand, while hourly fees can end up surprising you. Commission-based fees can motivate advisors to make a lot of unnecessary moves.

To work with someone who has been vetted by a third party, look for designations such as Certified Financial Planner, which is the top standard. Other designations, such as Accredited Financial Counselor or Chartered Financial Analyst, may fit your needs better, depending on what they are.

It may be that you prefer a robo-advisor after all: If that’s the case, check out these best robo advisors of 2017.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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