How to Choose (A Great) Financial Advisor

Choosing a financial advisor can be a daunting task.

Personal finance is not an enjoyable topic for most, so many people decide to hire someone to work out their finances for them. Selecting a good financial advisor can save you money and put you in a better position to focus and achieve your financial goals.

There are many different types of advisors and many reasons a person may decide to get one. Whether you are trying to put your personal finances in order or setting up a plan for long-term investment objectives, use these steps to find the right advisor for your situation.

What Area Do you Need Help With?

The first question you need to ask is: what aspects of your financial situation do you need help with?

List your needs in order of urgency. If you are young, debt management and increasing income might be higher on your list. However, if you are nearing retirement, the best vessel for distribution in retirement might be your biggest concern. A good financial advisor should be able to guide you on all of these, although choosing an advisor specializing in retirement, for instance, might be the wiser choice for a 58-year-old.

People have different needs, and choosing an advisor should be based on that. An astute accountant will undoubtedly be able to help you navigate a pesky tax situation, while a registered investment advisor will be able to more strategically lay out how to distribute your savings upon retirement. First, determine what area you are in need of help with. Then, seek out a professional with that area of expertise.

Understand the Services Offered

Many advisors can handle more than one area of finance. When deciding who is best for you, it is important to know what options are available. Here are just a few of the many different services an advisor can provide:

  • Retirement planning: Planning for retirement is a multi-faceted task that can begin decades in advance. Retirement planners ensure you are able to retire comfortably and meet your financial goals once you stop working.
  • Wealth building and investments: These advisors measure your risk tolerance and hedge them against your portfolio to ensure that it performs at its optimal level and continues to build wealth.
  • Debt management and budgeting: Financial advisors can work with you to formulate a plan to tackle any outstanding debt. Many people have trouble with budgeting: financial advisors can help you start a budget to make the most out of your paycheck.
  • Tax planning: For those trying to decrease what they pay to Uncle Sam, advisors specializing in tax planning are a great option. They have many techniques to lessen your tax burden. These advisors should not be confused with those who prepare your taxes, such as certified public accountants.
  • Estate planning: As we approach what some are calling the biggest wealth transfer in history, estate planning is a popular topic. Regardless of how you want to transfer your wealth, estate planners can smooth out the process.

Understand the Title of “Advisor”

Fun Fact: There is no federal law regulating who can call themselves a financial advisor or give financial advice. There are many tales of so-called “advisors” giving dubious advice. It’s of the utmost importance to know the different types of advisors so you can determine the appropriate fit for you.

It is wise to choose an advisor bound by fiduciary duty, which means the individual is legally required to serve your best interest. Anyone can legally call themselves a financial advisor.  However, not all financial advisors are bound by fiduciary duty. For instance, brokers are generally not fiduciaries, although they are held to a less rigorous legal standard of care called the suitability standard. An advisor who is not a fiduciary may suggest products based on what pays them a higher commission, not on your true financial needs.

Finding an Advisor Who Is a Fiduciary

When choosing a financial advisor, it’s good to get recommendations from family and friends. In addition, check the letters behind a potential advisor’s name:  Registered Investment Advisors (RIAs) are held to a fiduciary standard, as are Certified Financial Planners (CFPs). You can check to see if an advisor is registered with the SEC.  And organizations such as the National Association of Personal Financial Advisors or the Garrett Planning Network can help:  members of these organizations are fee-only and are fiduciaries.

How Are They Getting Paid?

Everyone has to earn a living. Nonetheless, advisors should be upfront about how they earn money. If your advisor is not clear on this, you need to ask.


Many advisors operate on a fee structure. These fees can be charged as a percentage of the assets they manage or may just be a flat fee. However you are charged, make sure there are no hidden surprises.

Most advisors charging fees are bound by fiduciary duty; their income is tied to their client’s wealth blossoming, so it is in their best interest to provide the best service and recommend the best products.


Other advisors earn their living from commissions via third parties. These advisors are often brokers. Advisors earning commissions often advertise their services as free, as third parties pay out their commissions. Take additional care if you are dealing with commission-based advisors, as their income is not correlated with how well their product works for you. They can be incentivized to sell the products that pay the highest commissions rather than the products that are most suitable for their clients. These advisors are often not fiduciaries but rather salespeople.

Commissions are not bad, they are just something to be aware of. Life insurance, for example, is an industry that pays commissions; there is nothing wrong with life insurance commissions, it is just how the industry is structured.

Chemistry is Important 

A capable financial advisor should be qualified and competent in handling your financial situation. However, this is merely a prerequisite for considering their services. You should click with your advisor on a different level that has nothing to do with finance.

Your advisor should not make you unintelligent, and you should feel more clarity about your situation after meeting with them. Advisors should not be pushy or “salesy.”

Depending on your situation, your relationship with your advisor may span several years and even decades. The advisor you choose needs to be someone you can trust and learn from.

The Empathy Factor

Your financial situation involves many variables. Not all of them have to do with finance. Working as an advisor, I often ran into clients who would be taking home more money in retirement than they were while working, thanks to a great pension and other sumptuous benefits.

Despite the fact that they would be making more money and would be free to do as they please, unburdened by employment, many of these clients chose to keep working. Pressuring them to retire for the financial benefit was never an option for me. I knew that these clients felt apprehensive about retiring and were more comfortable going to work. Understanding the situation and empathizing with their perspective was imperative to being an advisor with a good reputation.

Competence in financial matters is a must. However, good chemistry between you and your advisor is crucial in building a functional relationship that will grow and be lucrative for both of you.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.