7 Factors to Consider Before Choosing Financial Advisors

choosing financial advisors

 A Financial Advice Market Review survey found that 1 in 10 adults in the UK sought financial advice within a 12 month period.

We’ve harped on before about why everyone needs a financial advisor, but how do you go about choosing financial advisors?

What you need in a financial advisor will vary depending on your individual circumstances. That being said, there are seven simple rules to follow to find the best financial advisor for you.

1. Know What You Need

You’ve decided you need a financial advisor, but what services do you require from them?

Are you looking to invest wisely, to plan for retirement, or do you need advice on taxes? 

Financial advisors offer a wide array of financial services, from investment management through to business finance plans. Only you know exactly the advice you need, but be clear on this before you even begin looking for a financial advisor. The normal financial advisor services are:

  • Debt Management
  • Budgeting
  • Health and long term care planning
  • Estate planning
  • Retirement
  • Inheritance
  • Tax planning
  • Investments

Whether you need specific advice on one aspect of your finances or a variety of services, the financial advisor you choose should be able to cover all these areas. Additionally, if you know you’re looking for long-term advice, keep this in mind when choosing. 

2. Financial Advising Experience

Frustratingly, nearly anyone can call themselves some kind of financial advisor. It may come under a different heading such as a financial coach or planner, but these titles come with minimum qualifications. 

Due to this, it’s important to really know your potential advisor’s experience and qualifications. This ensures your money and assets are in the best hands possible. 

A good financial advisor’s website should have their qualifications, education, and experience listed. Review all of these things to figure out whether their knowledge will help your unique needs. 

Not all qualifications are equal. In particular, depending on your location, the qualifications to ensure your advisor has are:

  • The Certified Financial Planner Designation
  • Certified Public Accountant
  • Enrolled Agent
  • Chartered Financial Analyst
  • Accredited Financial Counsellor

3. Comparing Advisor Fees

It should go without saying that you should do research into different fees for any service. This is never more pertinent advice than with financial advisors.

This is because financial advisors get paid in a few different ways, and sometimes this can be at odds with your best financial interests. For example, if your advisor is getting paid on a fee-only basis regardless of their advice, they have less incentive to grow your wealth. Whereas if they were paid on a commission and fee basis, they have more incentive to invest wisely to increase their commission. 

Typically, a financial advisor will be paid one of three ways:

  • Fee-only
  • Commission
  • Fee-based (a mix of both)

You need to figure out what would work best for your individual circumstances.

4. Transparency

While we’re talking fees, it’s time to talk about transparency. Long gone are the days of the elusive and mysterious investment elite. If your financial advisor isn’t being upfront, ditch them.

A good financial advisor will be transparent about all fees to be charged. You should have this in writing, and they should be happy to give it to you.

Not only transparency about fees but also plans. You should be clear on what plans your financial advisor will make, as well as how regularly you can expect updates, reports, and meetings. 

5. References and Reviews

Even now, word of mouth might still be one of the best ways to find a financial advisor. But if you don’t happen to know anyone, the internet is a great substitute.

As well as checking qualifications and education, you should check reviews. On their site, on Trustpilot, and on Google. 

6. Performance reporting

As we mentioned briefly, you want regular reports on your assets and wealth. But it also needs to be in a digestible format. That is to say, you don’t want an array of random charts and figures you can’t actually understand.

You need clear, concise reports on performance, transactions, and holdings. You can choose how regularly you want to receive these. Whether it’s monthly, quarterly, or bi-annually, your financial advisor should be happy to provide them. 

As we live in a digital world, many of these offerings may be in online services. You should know what financial planning software is in use and whether you will have access to it.

7. Talk to Your Advisor 

Before signing up for anything, talk to your advisor in depth. If they’re part of a firm, know exactly who will be running your account and who you’ll be dealing with. Get to know them.

Ensure you get an initial meeting – whether by phone or in-person – and know exactly how often you’ll be speaking to them. Is it once a month or once a quarter? Will they regularly be contacting you with updates?

This is particularly important if you’re looking at long-term financial advice. Your life will change due to work, relationships, children, and so on. You need to have regular contact with your financial advisor to take these changes into account and amend your plan accordingly. 

Choosing Financial Advisors

Using our tips above, you should be able to find a reliable and trustworthy financial advisor to manage your assets. Make sure to take your time choosing financial advisors, and avoid any cheap pressure tactics from firms. 

For more financial advice, make sure to see our financial section to keep you up to date with the latest news.

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