A financial advisor will play a vital role in your life. As people who will be involved in your financial success, you need to choose someone you can trust. This is why it’s important to weigh your different options and gauge how helpful they will be in your situation. Here are six things you can do when choosing a financial advisor.

What to Consider When Choosing a Financial Advisor

The following considerations are vital in guiding you towards someone who will help you achieve your financial goals.

1. Make Sure They Have Experience

How long have they been practicing as a financial advisor? When you get people to deal with your finances, the more experiences they have, the better.

Being educated is not enough. You want someone who has gone through the process of managing another person’s wealth, and therefore knows what works and what does not.

2. Ask for Their Credentials

When choosing a financial advisor, ask them about their certifications. The top licenses for a financial advisor are the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and a Personal Financial Specialist (PFS).

If your financial advisor holds any one of these credentials, they are likely to be more capable and educated than your typical advisor. A CFP requires at least three years of experience, a CFA specializes in investment research and managing projects, and a PFS specializes in financial planning as a CPA.

3. Look Through Their Areas of Expertise

Just because a financial advisor is experienced and licensed doesn’t mean they’re the best person to help you out. If you are seeking assistance with personal wealth management, you don’t approach a financial advisor who specializes in providing support to companies regarding their tax plans. Choosing a financial advisor whose expertise matches your needs will provide you with greater insight.

4. Conduct a Google Search

Due diligence is important. Before you hire a firm to help you plan out your finances, conduct a Google search to find out their reputation. This will let you know if their company has been facing lawsuits or dissatisfied customers in general.

You can also look up their Form ADV, which will show you any possible conflicts of interest or past disciplinary information.

5. Understand Their Fee Structure

When you are choosing a financial advisor, ask how they will charge you (or find out from their Form ADV). These are the typical payment structures a financial advisor can use:

• Commission-based. Financial advisors that receive payments through commissions will gain a cut when you purchase some services, insurance plans, or mutual funds that they recommend. There is a potential conflict of interest here because receiving commissions can cloud an advisor’s considerations, which may lead to them selling you something that may not be your best choice.
• Fee-based. Fee-based advisors will charge you a fee for their services, but they can also receive commissions from any plans that they refer you to. This means that there is still a possibility of a conflict of interest, and you will need to take their advice with a grain of salt.
• Fee-only. Fee-only financial advisors are considered the ideal type of advisors. They receive payments from you for their services, and that’s it. They’re not trying to sell you anything else, so rest assured the information that they provide you will be the ones they think are the best for your situation.

6. Look for a Fiduciary

A fiduciary is a financial advisor that commits to putting their clients’ interests first. They are legally bound by this declaration, so choosing a fiduciary financial advisor will allow you to find peace of mind knowing that they will do their best to help you succeed.

Not going with a fiduciary can cause a huge difference in the quality of their financial services. A firm can provide you with advice that is good enough but not the best and may harm your wealth enhancement prospects.

Choosing a Financial Advisor? Find Someone You Can Trust

Windward is a fee-only advisory firm that prioritizes providing you with the best information to facilitate wealth management, tax planning, or financial planning processes. We work to find opportunities that are in your best interest.

To start your journey towards financial security, contact us today.