How to Choose a Financial Advisor

What is a Financial Advisor?

So, what does a financial advisor do, and how can they help you meet your money goals? Financial advisors are professionals who guide clients to manage their money effectively. Advisors can work as independent agents or with institutions like credit unions. They possess the training and licenses to assist with various specialized financial services. Financial advisors charge an upfront fee or take a commission percentage from third-party services. 

Financial advisors can help you establish money goals and may specialize in specific types of financial planning. Here are some of the most popular financial services available: 

• Budgeting: Financial advisors can help you make a monthly budget, planning for expenses and savings. They can also help you budget for major purchases like a home. 
• Debt management: If you have outstanding debts, such as student loans or a mortgage, financial advisors can help you set up a payment plan to stay on track. 
• Tax planning: Plan for tax season with a financial advisor who can assist you with identifying potential write-offs and tax-sheltered investments. Typically, you or your accountant will still need to handle filing. 
• Retirement planning: It’s never too early to plan for retirement, and financial advisors can help you save for the future.  
• College planning: Financial advisors can help with your or your family’s college planning, from budgeting to investment savings. 
• Estate planning: Our money has to be managed, even after we’re gone. Financial advisors can help draft a plan so you can pass your legacy on to your family and favorite charitable causes.  
• Investments: Once your monthly budget and savings are covered, advisors can help you manage your stock and investment portfolio. They can guide you in deciding where and how much to invest. 
• Insurance: Many financial advisors can also help you select insurance coverage to protect your investments. 

While some financial advisors offer general services to cover every aspect of financial planning, others specialize in select areas. So, defining your financial goals is essential before selecting an advisor.  

The Importance of Choosing the Right Financial Advisor

Choosing the right financial advisor comes down to alignment with your needs and accountability. Your financial advisor will help you through some of your most significant money decisions, so it's essential to take the time to find the right fit. 

Set aside time to assess your financial goals and lay out your budget before making an appointment with an advisor. For example, if you’re looking to pay down some large bills, an advisor specializing in debt management could be a great fit. Defining your needs will help streamline the process and ensure you find the right financial advisor to help you reach your goals. 

Once you find an advisor who aligns with your needs, you must verify that they are trustworthy and accountable. Some financial advisors, such as those working through larger organizations like credit unions, have a fiduciary duty to their clients, meaning they are legally obligated to act in their clients’ best interests. 

Additionally, look for certified financial advisors registered with the proper licenses your state requires. As with any profession, experience, and testimonials matter. 

How to Choose a Financial Advisor

Choosing a financial advisor is a big decision. However, you can make the process easier by outlining your top priorities. Here are a few factors to consider when choosing a financial advisor: 

• Know your goals. Assess your goals and find an advisor with expertise in your financial needs. Knowing where you want to start will make choosing a financial advisor much easier.
• Check credentials and experience. Verify your advisor is registered with the SEC and your state. You can check their credentials online to ensure they’re upfront and accountable. 
• Understand the fee structure. Advisors may charge fees by the hour or take a commission from third-party sources. Ask about the payment structure upfront to avoid any surprises. 
• Verify their communication style and availability. Good communication is vital to good relationships. Learn how your advisor prefers to conduct business — whether in person, over the phone, or through email. Understand where you fall into their schedule as a client, and verify they have the time to help you. 
• Check for a personality fit. No matter how skilled your financial advisor is, compatibility can make or break a working relationship. Your advisor will be helping you make major financial decisions, so find someone you get along with and trust. 
• Ask for referrals and reviews. If your advisor has experience and happy clients, they can easily supply you with referrals and reviews. Learn firsthand what other clients have encountered. 
• Interview prospective advisors. You don’t have to go with the first advisor you meet. Plan to interview prospective advisors, take notes, and find the one who is the best fit for your needs. Make a list of important questions ahead of time to keep your meetings on track and timely. 

Keep these factors in mind, and you’ll be well on your way to finding the right financial advisor for all of your money needs.

Further Resources on How to Choose a Financial Advisor

Ensure you choose the right financial advisor with these helpful resources. 

• Get a head start on your financial education. Learn the basics of investing through introductory guides, financial calculators, and more through Investor.gov. 
• Trust but verify. Confirm SEC and state registrations of financial advisors and firms with AdviserInfo.sec.gov. 
• Understand the alphabet soup. Financial advisors have different certifications, some more rigorous than others. Understand what the letters behind an advisor's name mean at Finra.org/investors/professional-designations.
• Document your progress. Begin tracking your monthly budget with budget worksheet templates from Consumer.gov. 

Find Your Financial Confidant

Choosing the right financial advisor can be just as crucial as finding a meaningful friendship. Ultimately, you’re looking for someone you can count on to help you with life’s biggest decisions — so they better have your back! Fortunately, that’s one of the top benefits of working with a financial advisor at a credit union. Begin your journey by finding member-centric credit union financial advisors with our Credit Union Locator Tool.  

Did You Know?

Credit unions often have financial advisors ready to help you with life’s biggest financial decisions, from your first investment to your first home. Unlike large corporate banks, not-for-profit credit unions are built around their members, so you always know your advisor has your best interests in mind.