What makes a good financial advisor?
When it comes to getting financial advice, you want the best. Finding the right financial advisor can help secure your financial future, so you’ll want to know what to look for.
Summary
Financial advisors should possess in-depth subject matter knowledge and hold current certifications, such as a CFP®, that demonstrate their education, experience, adherence to ethical standards, and ability to pass rigorous testing to prove competency.
Good financial advisors are honest, communicate well, and are willing to accept their limitations.
Watch out for financial advisors who sell products or services that don’t serve your needs.
Unbiased is an easy way to connect with some financial advisors who are most suited to meet your needs.
What makes a good financial advisor?
A good financial advisor can help secure your financial future. They’re an important part of your life, and selecting a good one is where it starts.
When you’re looking at potential financial advisors for you and your family, certain traits make good financial advisors stand out from the rest.
Here are some important traits to look for.
1. Client-focused
Financial advisors should be focused on your needs and helping you come up with a plan that sets you up for success.
They make it their personal mission to help and serve you. Watch out for financial advisors looking to sell products that earn them high commissions.
Questions to ask a financial advisor to ensure they’re client-focused may include:
Are you an independent agent? Some financial advisors are captive to the company they work for, which means they’re only able to recommend financial products from that company. Insurance agents are a good example of this.
Are you a fiduciary? Fiduciaries are required by law to look out for your interests. They cannot receive payments that create conflicts of interest.
How will you track performance and communicate with me? It’s important to work with a financial advisor and define benchmarks for performance. Do they have a plan for adjustments if those benchmarks aren’t met? How are they going to communicate with you?
2. Strong communicator
Building relationships is at the core of a good financial practice. Your financial advisor should be interested in you – your life, your goals, your family, and how managing your money will benefit you.
A personal connection with a financial advisor can help with trust – trust needed so you know they’re making good decisions with your money. If you trust them to make good decisions with your money, you’ll feel more comfortable sticking with a long-term financial plan.
A good financial advisor can help you make that financial plan. You can develop goals and expectations together and set communication standards. You’ll work together toward a common goal.
3. Experienced
Experienced financial advisors are invaluable.
Look for an advisor with certifications such as a CFP®, CIC, or ChFC®.
An experienced financial advisor is conscientious, knowledgeable, always learning new things, and able to direct clients to additional services they need.
4. Comprehensive, but understand their limitations
Financial advisors are often tasked with understanding all the different aspects of your finances.
While they are very knowledgeable, it’s not realistic for them to be an expert in every single area.
Good financial advisors can point a client in the right direction, sometimes to another expert, instead of trying to manage everything on their own.
5. Ethical
Many financial advisors are ethical, professional, and make decisions based on your needs.
Don’t do business with a financial advisor who puts their needs above your own (i.e., encourages you to invest in funds that earn them a higher commission). It’s hard to know if a financial advisor is ethical when you’re meeting them for the first time.
According to the CFP Board’s Code of Ethics and Standards of Conduct, a CFP® professional must:
Act with honesty, integrity, competence, and diligence
Act in the client’s best interests
Exercise due care
Avoid or disclose conflicts of interest
Maintain the confidentiality and privacy of the client
Act in a manner that reflects positively on the financial planning profession
6. Fair compensation
You need to trust that your financial advisor is worth it.
One of the top reasons clients leave their financial advisors is cost. Hire a financial advisor with fair compensation from the get-go so you can feel better about the services they’re providing for you.
According to Envest, fees average 1.05% for the assets under management (AUM) model, $2,554 for the flat fee model, and $268 for hourly fees.
How do I find the right financial advisor?
Even if you know what attributes to look for in one, it’s still difficult to choose the right financial advisor.
You can ask trusted family and friends for financial advisor recommendations or look for reviews online. You can also check their registration on the FINRA BrokerCheck website.
You can also easily be connected to an advisor through Unbiased. Simple answer a few questions about your needs and situation, and we’ll find an advisor most suited to help.
Get expert financial advice
A good financial advisor is focused on your needs, communicates effectively with you, is experienced and ethical, and requests fair compensation. There are many ways to find a good financial advisor – just keep in mind that the financial advisor should work for you and your family.
Don’t forget, one of the easiest ways you can be connected to a good financial advisor is through Unbiased.. After answering a few questions, you’ll be paired with an advisor suited for your needs.
Content Writer
Alene Laney is an award-winning journalist for Unbiased, where she breaks down financial topics related to retirement, investing, and banking. She specializes in helping readers make the best decisions for their money with long-form content for brands and consumer publications.