Financial Advisors: How to Choose the Right One

Nowadays, there are many events in life in which we could do with a little bit of financial advice. The right financial advisor for you will depend on your personal situation. Whatever that may be, making a decision can be quite overwhelming. Here are some tips to make the choice a little easier.

What does a financial advisor do exactly?

Financial advisors help people to realize their financial goals by providing advice as to how best manage their money. The term is a wide-ranging one, as there are several types, who specialize in different areas, and have different qualifications and job titles. Additionally, the term can also refer to computer algorithms which manage your money to optimally balance your investments, for maximum yield and minimum tax liability. Online tools are also available to assist in future planning, and prove much cheaper than consulting someone a bit more flesh and blood.


When might I need a financial advisor?

There are many situations in which hiring a financial advisor could prove wise. They will advise you on the best options available, help you prioritize, and be a comprehensive source of information. Here are some examples:


  • At the time of a major life event: getting married; starting a business; buying your first house; leaving a job.


  • When money issues can be overwhelming: an inheritance; getting divorced; selling assets; tax issues; dealing with multiple financial goals; lack of financial security; debts.


  • To assist with decision-making and provide specific information: net worth of your assets; fund management; income management for retirement


Which type of financial advisor do I need?


It is important to choose the correct financial advisor for your needs – to avoid unnecessary costs and get the specific information and service you require.

There are three major factors that will influence the category of professional you require: your budget (to spend and invest); the degree of complexity of the decision; and the duration of the planning needed.

For example, there are some financial advisors who won’t work with people who have less than $250,000 in assets that they are ready to invest, and similarly if you have a small amount of money it makes little sense to spend it on fees. Anything under $25,000 would therefore likely be best served via “robo-advisors” online, because such companies offer low-cost money management and advice, providing tools and advice based on algorithms. If your sum lies somewhere in between the two, then it is a case of weighing up whether you need the human touch or not. In the case of higher amounts available being ready for investment, it doesn’t automatically mean that one-on-one advice is necessary.

Another key factor is the complexity of the financial situations. The more straightforward it is to resolve or manage, the more likely that an automated, online system will suffice. However, for situations such as complex portfolio investments, estate-planning, or divorce, it might be that a personally assigned expert is what you require. This is also more likely to be the course of action if the investments are long-term and require regular monitoring and management.

How to choose a specific advisor

Now that you’ve identified what you need, it’s time to find it. If you opt for an online service or robo-advisor, then ensure you search out companies with low fees, low minimum requirements, and savvy tools that hold up to scrutiny. Check that your chosen supplier, has some specialist knowledge.

If a human-robo hybrid is the option you wish to pursue, again look for low fees and maximum availability. Some services permit unlimited contact via email or on the phone.

Many one-on-one experts work remotely nowadays, so you have a wide choice available. Similarly, go with recommendations as you would in other scenarios, or for added peace of mind, search for them on specialist industry websites such as the National Association of Personal Financial Advisors and the Financial Planning Association. Ensure you prepare specific questions that test their knowledge and suitability. Gauge their interest in providing you with a top-notch service, and of course, check their fees.