How to choose a financial advisor
Your style and your needs should drive your decision in choosing a financial advisor. Follow these steps to help find the one who's a good fit for you.
Building a financial future can feel overwhelming. The sea of savings vehicles and investment options is vast, and conflicting advice can make it difficult to know if you're making the right decision.
A financial advisor can cut through the confusion so you can more clearly see the path to your savings goals. But how do you find an advisor that works for your specific needs?
The trick is to understand your options, identify the services you need, research prospective candidates, and match with a partner you trust. Let's walk through the process.
What a financial advisor can do for you
Your financial advisor helps you map
Everyone has a unique vision, and your advisor will work with you to find investment options designed to help advance your customized strategy.
An effective financial advisor will do the following:
- Create a tailored strategy that helps you work toward financial freedom
- Identify quality, diversified investment products
- Recognize your risk tolerance
- Help you find tax-efficient investment strategies
- Navigate changes in your life and in the market to help keep your plan on track
Financial advisors can guide you at every stage of the journey
Finances touch every part of your life, and it’s
Three types of financial advisors
Whether you like to manage your own portfolio, want someone else to take the reins, or prefer something in between,
"Robo-advisors" – These financial services are provided entirely online and are sometimes referred to as robo-investing. It’s a digital-only experience that doesn’t include meeting with an advisor. Instead, a computer algorithm collects information, offers recommendations, and answers questions.
You pay fees for the service and you usually have to hold a specific amount of cash, which is how these companies make their earnings. You won’t get personalized guidance, but it can be a good option for those with a “do-it-yourself” mentality.
- Pros: Easy to start, usually less expensive than in-person advisors, fitting introduction for beginner investors.
- Cons: Can’t provide personalized advice about your financial situation, may not be able to advise you on savings strategies.
Online financial planners – Similar to robo-advisors, these services are offered only online. You get a bit more personalization than a robo-advisor because you have access to a real-life professional to answer your questions. You may not speak to the same person every time you reach out, so it can be hard to build a long-term relationship.
- Pros: Easy to start, good for beginners who want some support, more personalized than a robo-advisor.
- Cons: Difficult to track progress toward long-term goals, may not be able to provide a high level of hands-on custom advice.
Traditional financial advisors – A dedicated financial advisor builds a lasting relationship with you and supports you through a custom, long-term strategy. This is the most personalized type of financial advice.
- Pros: Suitable for investors at all levels of their financial journey, offers the highest level of personalization, cultivates a deeper understanding of long-term goals, provides planning for life events and market turbulence.
- Cons: May be more expensive than other options,
depending on the assets under management.
How your financial advisor looks out for you
Traditional advisors offer guidance informed by a team of investment strategists. This can help them identify opportunities, reduce risks, and navigate fluctuations in the market.
Life changes can also impact your finances, like a new house or job. While you navigate these changes, your financial advisor keeps an eye on how they impact your savings and investments. They offer information and guidance to help you make smart decisions,
The best financial advisors understand how to keep you motivated and moving
How to choose the financial advisor that’s right for you
Look to those you trust for a reference and conduct online research to discover an advisor's investing approach and values.
1. Decide which services you need
Not every advisor offers or focuses on the same services, so understanding what you need—and what you don’t—can help you quickly narrow the field.
The services you need will change over time, so choose an advisor who can evolve with you.
For example, a young person just starting their career might need immediate advice on investing and retirement planning. But over the next five years, they plan to buy a house and start a family. By choosing a financial advisor who can help them with debt management and college savings plans when they’re ready, they can continue building their financial future with the same level of trust.
In addition to services, your financial advisor may offer investment products like mutual funds, insurance policies, or annuities. They can explain which of these products would make a good fit for your financial strategy and why.
Once you identify a few potential advisors, look up each person’s Form ADV to help you compare potential advisors side by side. All investment advisors are required to complete this form as part of their federal and state registration.
Look for the Client Relationship Summary and advisory brochures on each advisor’s form.
- The Client Relationship Summary (or Form CRS) covers the services the advisor offers, the
irfees, key questions to ask, and where to find more detailed information.
- The advisory brochure discusses a firm’s advisory programs, including its business practices, fees, potential conflicts of interest, and disciplinary history.
- The brochure supplement is similar to a resume for the financial advisor and those who provide supplementary advice to their clients. It informs you of each person’s educational background, business experience, and disciplinary history.
Another online tool, sponsored by FINRA (Financial Industry Regulatory Authority), lets you search certifications and registrations. This tool will also let you know about any complaints or arbitrations involving the advisor.
Many financial advisors have additional credentials, such as Certified Financial Planner (CFP), Accredited Asset Management Specialist (AAMS), Chartered Retirement Planning Counselor (CRPC), Chartered Financial Consultant (ChFC), and state insurance licenses.
Ask the advisor about their specific credentials and credentialing agency to help you decide which certifications are relevant to you.
4. Research financial advisor fees
Financial advisors have a variety of fee structures. No one structure is “better” than another, but it’s important to understand how your financial advisor is compensated.
- Commission-based: You pay each time a transaction takes place
- Fee-based: You make an annual payment equal to a percentage of the assets you have in management
- Fee-only: You pay a set hourly fee for their services
5. Create a list of questions to ask
There are two kinds of questions you should ask to gauge how well you and a potential advisor will work together.
Practical questions help you understand how the advisor runs their business:
- What services do they offer? Estate planning strategies, wealth strategies, and education savings strategies are all examples of investment services.
- What investment products do they offer? Planning your investments is a service; the investments themselves are products. Investment products might include specific accounts, stocks, bonds, CDs, mutual funds, exchange-traded funds, insurance, and annuities.
- How do they work with their clients? Understand how often they communicate, who else on their staff might be involved in your account, and how hands-on they are in account management.
- What tools are available to use? These might include online account access and savings calculators.
- What educational resources are available to help you better understand the market and your investments?
Relational questions can help ensure you and an advisor align on a mutual investing approach:
- When you imagine your ideal financial future, what’s important to you? Write down your most meaningful financial goals and ask potential advisors how they would help you achieve them.
- What traits would make you confident in an advisor’s guidance? Consider their level of training, years of experience, or their particular investment philosophy.
Here are 10 more questions you can ask to guide a conversation with financial advisor candidates.
6. Set up a first meeting
Once you've narrowed your list to the top candidates, you know what services they provide and you’re confident in their reputation and qualifications. Now you’re ready for your initial meeting.
At the initial meeting, be prepared to talk about your current financial situation, savings and life goals, risk tolerance, communication style, and how involved you'd like to be in the day-to-day investing.
The purpose of the first meeting is for you and the advisor to learn about each other and make sure they’re a good fit for you.
- Your long-term goals. If you’re not sure what they are yet, that’s OK. Talk through your personal and professional life and explain what's important to you. You and the advisor can identify them together.
- Your current financial situation. Bring information about your current investments, assets, income, expenses, debt, and insurance coverage. You may be able to send these documents in advance if the advisor has a Secure Document Exchange tool. If so, the advisor can review them beforehand and be better prepared to discuss them at the meeting.
- The list of questions you developed in Step 5. By the end of the meeting, you should feel all your questions have been answered and you have what you need to make a decision.
The success of your relationship with your financial advisor comes down to trust and communication. The best advisor will explain your options clearly and welcome your questions.
How to get started with a financial advisor
Edward Jones financial advisors offer clear, thoughtful guidance tailored to help you achieve the future you want. Our personalized, long-term approach is centered on your goals so you can move forward with confidence, supported every step of the way.
Take our 3-minute quiz to be instantly matched with a short list of financial advisors with the skills and experience you need. Review your matches and set up a free first meeting with the ones who seem like a good fit.
Learn more about what a financial advisor can do for you
Still not sure if you need a financial advisor? This free report can help you decide.
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