At Powercat Financial, we can help you with a variety of topics ranging from student loans and budgeting to credit and job evaluation. Sometimes, though, you may wish to meet with a certified professional in our field for additional help on denser topics such as investment management or estate planning. Picking the right financial advisor can be difficult but doing so means you won’t end up paying for services you don’t need or working with an advisor who isn’t a good fit for your financial goals. Here’s how to find the right financial advisor for you.
- Know what financial services you need
Identify why you’re looking for financial help. Do you need help with a budget? Would you like to create a holistic financial plan? Do you need tax help? Asking questions like these can help you narrow down what services your financial advisor should offer. Some financial advisors offer a wide variety of services, whereas others specialize in a couple specific areas.
- Learn about the different types of financial advisors
There’s no federal law that regulates who can call themselves a financial advisor or provide financial advice. While many people call themselves financial advisors, not all have your best interest at heart. That’s why you have to carefully evaluate potential financial advisors and make sure they are good for you and your money.
It is also important to understand the fiduciary duty. Some, but not all, financial advisors are bound by fiduciary duty, meaning they are legally required to work in your financial best interest. Financial advisors held to the fiduciary standard put your interests and goals first.
Fee-Only Financial Advisors
Fee-only financial advisors earn money from the fees you pay for their services. These fees may be charged as a percentage of the assets they manage for you, as an hourly rate, or as a flat rate. Almost all fee-only advisors are fiduciaries.
Financial Advisors who Earn Commissions
Some financial advisors make money by earning sales commissions from third parties. Among financial advisors that earn sales commissions, some may advertise themselves as “free” financial advisors that do not charge you fees for advice. Others may charge fees, meaning they derive only part of their income from third-party commissions. Commission-only advisors are not fiduciaries. Keep in mind, though, commissions aren’t bad in and of themselves. Some financial products are predominantly sold under a commission model.
Registered Investment Advisors
Registered Investment Advisors (RIAs) are companies that provide fiduciary financial advice. RIAs employ Investment Advisor Representatives (IARs), who are bound by fiduciary duty. An RIA may have one or hundreds of IARs working for it. IARs may call themselves financial advisors, and may be fee-only or fee-based. Some may have additional credentials, including the certified financial planner (CFP) designation. Because of their wide range of expertise, CFPs are well suited to help you plan out every aspect of your financial life. They may be particularly helpful for those with complex financial situations, including managing large outstanding debts and will, trust, and estate planning.
Robo-Advisors
Robo-advisors offer low-cost, automated investment advice. Most specialize in helping people invest for mid- and long-term goals, like retirement, through preconstructed diversified portfolios of exchange traded funds (ETFs). People with complex financial needs should probably choose a conventional financial advisor, although many robo-advisors provide financial planning services a la carte or for higher net worth clients.
- Research Financial Advisors
Because financial advisors come in many forms with many different specialties and offerings, you need to thoroughly research potential advisors. You want to make sure the person guiding your financial decisions is trustworthy and capable. You can find good financial advisors a couple of ways. Ask friends, family and peers for recommendations. Alternatively, look for financial advisors online. Many professional financial planning associations provide free databases of financial advisors:
- NAPFA (The National Association of Personal Financial Advisors)
- Garrett Planning Network
- XY Planning Network
- ACP (Alliance of Comprehensive Planners)
Questions to Ask a Financial Advisor
Once you meet with a financial advisor, there are a couple key questions you should ask to determine if the relationship will be a good fit. They include:
- Are you primarily a financial planner or investment advisor?
- Are you a fiduciary?
- How do you charge for your services?
- What designations/credentials do you have?
- What’s your backup plan?
Final Recommendations
The financial planning industry is full of ambiguities, so it is important to exercise caution when searching for a financial planner who meets your fiduciary and financial needs. That being said, the right financial advisor can help you achieve your financial goals and bring financial security to your life.
If you have questions regarding finding a financial planner or any financial topic, Powercat Financial is here to help. We offer free and confidential appointments in-person and via zoom. Appointment requests can be made online at www.ksu.edu/powercatfinancial.
RJ Salmen
Peer Counselor II
Powercat Financial
302 K-State Student Union, Third Floor
918 N. 17th Street
Manhattan, KS 66506-2800
785.532.2889
www.k-state.edu/powercatfinancial
https://www.forbes.com/advisor/investing/how-to-choose-a-financial-advisor/
https://www.nerdwallet.com/article/investing/how-to-choose-a-financial-advisor
https://www.morningstar.com/articles/819893/5-questions-to-ask-a-financial-advisor?utm_medium=referral&utm_campaign=linkshare&utm_source=link
