How do I know if my financial advisor is doing a good job?

Summary 

9 Signs your Financial Advisor is Doing a Good Job

How do you know if your financial advisor is doing a good job? If you’re paying them but are unsure what they’re doing for you, this article can help. 

There are plenty of good financial advisors, but it’s still wise to check up on your financial advisor, how they’re communicating with you, what they’re charging, what investments you’re in, and how you’re moving toward your financial goals. 

The following are signs you have a good financial advisor. 

1. Your goals are clear, and you’re making progress towards them 

With clear goals and a roadmap to get there, you should start seeing progress toward your financial goals with a good financial advisor. 

Some of these goals might include:

You’ll start to notice little changes in your investments, your savings, your debt levels, or you’ll see documents (such as an estate plan) come in. Things will start moving.

2. They act in your best interest

A good financial advisor acts in your best interest. 

They have experience with other people in your same situation, and it’s evident they have a set of solid ethics. They may be a fiduciary, which requires them to put your interests above their own. 

A fiduciary is harder to find than you think. A financial advisor at a bank or an insurance company, for example, can only recommend products from the company they work for. 

While those recommendations might sound good on the surface, you won’t be able to truly know because of who the financial advisor works for. These financial advisors are not fiduciaries. 

Questions you may want to ask:

3. They understand your risk tolerance and build an investment strategy to match

A financial advisor works for you, which means they should help you select investments to match your risk tolerance. 

If you’re a young investor interested in Bitcoin or other alternative investments, your financial advisor may take that into account. 

If you’re close to retirement and want to decrease your exposure to the ups and downs of the market, they’ll also take that into account. 

4. They’re a clear communicator

A sign that you have a good financial advisor is clear, consistent communication. 

Clear communication can help manage expectations and maintain a strong relationship. When those components are there, you’re ready for a trusting relationship with a financial advisor to benefit you for years to come. 

Some questions to help you understand how the financial advisor is going to communicate with you include: 

5. They’re transparent about pay

Transparency in pay is key, whether your advisor is paid on commission, a percentage of your assets, an hourly rate, or a combination of these. 

It’s essential to understand how a financial advisor is compensated, as this influences the advice they provide. 

Of course, your advisor needs to be paid for their expertise, but you don’t want to be locked into a product that doesn’t make sense for you because the advisor earned a commission from it. You should know exactly what services you’re getting and how much they’ll cost. 

6. They have a solid team

One of the signs you have a good financial advisor is an advisor who surrounds themselves with competent, professional people. 

The people and processes your financial advisor puts in place help keep your money on track. The operation seems like it’s going to be around for years to come. 

If you find an advisor with a solid team, you’ll feel more confident about their ability to help you with your money questions.

7. Comprehensive plan for your finances

A good financial planner helps create a comprehensive financial plan, which many people prefer in a financial advisor. 

This doesn’t mean they have to be an expert in every area, but they should be able to get you the help you need. 

They can point you in the direction of another financial advisor or an expert who can answer your question.

8. Minimize taxes and fees

Minimizing fees and taxes puts more money in your pocket, and if you have a good financial advisor, they’re going to be passionate about this. 

Of course, not every financial advisor is a CPA or a tax planner, but they should know where to direct you for tax strategies for high-income earners or how to create wealth that is as tax-efficient as possible.  

Likewise, for investments, insurance, and other products that produce a commission, your financial advisor will try to minimize these fees. If you see a lot of fees on your investment account statements, it’s time to ask questions.

9. Continually learning

A good financial advisor keeps abreast of new developments in the field and can advise you accordingly. 

They know the law, where to look for additional resources, and where to refer you for specialty financial services. They earn professional certifications, such as CFP®. 

They learn new technology and keep up with best practices. 

How can I find a good financial advisor?

Finding a good financial advisor who is just right for your needs takes a little work. It’s advisable to meet with them before you agree to do business together. 

Don’t know where to look for a financial advisor? Ask family and friends for recommendations. Financial advisors generally stay in business and have others recommend their services if they’re doing a good job. 

You can also find advisors online, such as with Unbiased. 

Get expert financial advice

There are many good financial advisors, and checking in with them is a good way to keep your financial goals on track. If you see a lot of fees and low communication from an advisor, you might want to ask your advisor some questions.

Unbiased can match you directly with an advisor best suited to meet your needs.