Are you finding it challenging to manage your finances? If so, you’re not alone. A lot of Americans could use some help with their money. The National Financial Educators Council says that Americans lose $1,500 a year because they don’t know how to handle their money. This number shows how important it is to get help from a professional when you’re trying to figure out your personal finances.

You can avoid these costs and stay focused on your goals if you choose a good financial advisor. You don’t have to be rich to work with a financial adviser. Anyone who wants to get their earnings in order and set long-term goals should do so. If you want to take charge of your financial future, here are six steps to take to find the best financial advisor for you.

 

Key Takeaways on Seeking Financial Management Assistance

• Financial Guidance is Crucial: Many Americans lose an average of $1,500 a year because they need to learn more about personal finance. This shows how important it is to get professional financial help.
• Financial Advisors are Accessible: Financial experts are helpful for everyone who wants to improve their financial health and reach their long-term goals, not just rich people.
• Avoid Unnecessary Costs: Working with a financial expert can help you avoid the problems associated with bad money management and make smarter choices.
• Long-Term Financial Planning: A good financial adviser can help you set and reach your long-term financial goals and give you a plan for the future of your money.
• Six Steps to Finding the Right Advisor: If you follow an organized process when looking for a finance advisor, you can be sure to find one who meets your needs and helps you reach your financial goals.

 

Step 1: Decide What Part of Your Financial Life You Need an Advisor For

It is very important to know exactly what parts of your financial life need help before you hire a financial adviser. When you meet with an adviser for the first time, be ready to explain exactly what you need help with with your money.

Best Financial Advisors do a lot more than give help on investments. A good financial manager can help you with all of your money issues, like planning for retirement and paying off debt, as well as suggesting insurance products and making plans for your estate.

Depending on where you are in life and how much money you have, you might only need to do a little financial planning. For example, young people who don’t have children or have a lot of debt might only need help planning for retirement.

People with complicated cash problems, on the other hand, may need more help. This could mean setting up college funds or trusts for kids, handling bold plans to pay off debt, or dealing with tricky tax problems. You can find the best financial advisor for you by figuring out what you need. This is because not all advisors offer the same services.

 

Step 2: Understand the Different Types of Financial Advisors

There is no federal regulation that says who can give financial help or call themselves a financial planner. Because of this, a lot of people call themselves “financial advisors,” but not all of them have your best interests at heart. You should carefully look at possible experts to make sure they are a good fit for you and your money.

Fiduciary duty is an important concept to understand when looking at the different types of advisors. Fiduciary responsibility means that some financial experts are legally required to look out for your best interests when it comes to money. Others follow a standard called “suitability,” which says they can only recommend products that are right for you, even if that means suggesting more expensive products that pay more for the counselor. The SEC wants to make sure that only people who follow a responsible standard can use the word “advisor.”

It is important to know how your advisor makes money, no matter what kind of advisor you choose. This information helps you determine whether their suggestions are good for you or just a way for them to make more money.

 

Here’s a brief overview of five types of financial advisors to consider:

• Certified Financial Planners (CFPs):These professionals have done a lot of difficult work in school, passed a big test, and are expected to follow a strict code of ethics.
• Registered Investment Advisors (RIAs):RIAs give advice and handle assets, and they usually charge a fee based on a portion of the assets they manage.
• Broker-Dealers:Most of the time, these experts have to meet a standard of fitness, and they get paid fees for selling financial goods.
• Insurance Agents:They might also give you financial help, but their main job is to sell insurance and get paid fees.
• Robo-Advisors:These automatic systems offer financial planning services with little to no human help and usually cost less.

 

Step 3: Determine the Type of Financial Advice You Need

There is a wide range of services that financial advisers offer, so it’s important to be clear about what kind of financial advice you need. Here are some common places where financial experts can be very helpful:

 

Investment Advice:

Financial advisors study different investment choices and help you manage your account so that it fits your financial goals and level of risk tolerance.

 

Debt Management:

If you owe money on things like credit cards, student loans, cars, or mortgages, financial experts can help you make an organized payback plan that will help you handle and pay off your bills more quickly.

 

Budgeting Assistance:

Financial experts can look at how you spend your money and help you make a budget that fits your financial goals. This will help you get the most out of your money.

 

Insurance Coverage:

Your advisors can review your current insurance plans to find any gaps and suggest that you get more coverage, such as long-term care or disability insurance if you need it.

 

Tax Planning:

Advisors can help you find ways to pay the least amount of taxes possible, such as by giving to charity or reaping tax losses. However, keep in mind that tax planning is not the same as tax preparation. To file your taxes, you may still need a CPA or tax software.

 

Retirement Planning:

Financial experts help you build a strong retirement fund and give you advice on how to handle your money well after you retire so that your money lasts the whole time you’re retired.

 

Estate Planning:

If you want to leave something behind, a financial expert can help you plan how to give your money to the next generation, whether it’s to family, friends, or a charity.

 

College Planning:

Advisors can help you make a plan to save money for your loved ones’ college costs if you want to pay for their schooling.

In addition to these specific services, financial managers also offer mental support and a different point of view when the economy is unclear. For example, when the coronavirus pandemic started in March 2020, clients wanted to talk to their financial advisors a lot more because they wanted to feel better and get advice.

Make sure that the financial expert you choose can help you reach your personal and business goals. This alignment will help you make a complete and useful plan for your money.

 

Step 4: Determine Your Budget for a Financial Advisor

Before you hire a financial adviser, you should know how much they will cost and how they will fit into your budget. In the past, financial advisors get paid by taking a cut of the money you had invested with them. But today’s financial planners offer different ways to pay, which means that clients with a range of budgets can use their services.

 

Commission-Only Financial Advisors

Since commission-only coaches don’t charge any fees upfront, they might look like they are free. They do, however, get paid a fee for the stocks or insurance they sell. These experts are usually found through insurance or financial firms. They may only follow suitable standards, which means that the suggestions they make may only sometimes be the best ones for you. Sometimes, you pay as much or even more for their advice than you would for a financial planner.

 

Fee-Only and Fee-Based Financial Advisors

There are different ways to pay for fee-only and fee-based counselors. They could base their fees on the total amount of money they handle for you, which is called assets under management (AUM). They could also charge by the hour, per plan, through a contract agreement, or as a service. Here are some popular ways to set fees:

• Assets Under Management (AUM):A percentage of the assets managed, typically ranging from 0.25% to 1%.
• Hourly Rate: Fees can vary, often ranging from $150 to $400 per hour.
• Per Plan:A one-time fee for a comprehensive financial plan, often between $1,000 and $5,000.
• Retainer Agreement: An ongoing fee, paid monthly or quarterly, that can range from $2,000 to $7,500 per year.
• Subscription Model:A fixed monthly fee, typically between $100 and $300.

 

By learning about these fee systems and figuring out how much you can spend, you can find the best financial advisor for your needs and get good advice without going over your budget.

 

Step 5: Research Financial Advisors

It takes a lot of study to find the right financial advisor because financial help comes from a lot of different types of pros. To make smart financial choices, you need to make sure that the expert you choose is reliable and knowledgeable.

Start your search by getting suggestions from friends, family, and coworkers. Referrals from people you know can tell you a lot about how reliable and helpful an adviser is. There are also places online where you can look for financial experts. You can find reviews and scores of possible financial gurus on websites and lists that are just for that purpose. You are more likely to find a skilled adviser who fits your financial goals and wants if you take the time to do study.

 

Step 6: Hiring A Financial Advisor

Once you’ve selected a financial advisor, the next step is to officially engage their services. While the process may vary, here’s what you can generally expect:

• Initiate Contact:Reach out to the advisor or firm you’ve chosen. A lot of counselors’ websites have calendar links that make it easy to set up a call for the first session.
• Prepare Basic Information:Get important information together before your meeting. If you have a partner, discuss your short—and long-term financial goals to clarify them. Even though you don’t have to know everything, being clear about your goals helps the adviser decide if you’re a good fit.
• Consultation Call:The advisor will likely ask you basic questions during the meeting. A good counselor will look beyond the numbers to understand the kind of life you want and how your financial plans can help you make it happen. Make sure you understand by asking your questions, especially about how the adviser is paid.
• Review and Sign Documents:After the first meeting, the advisor usually gives you legal and financial paperwork. These papers explain what the counselor does, how much they charge, and what both parties are responsible for.
• Provide Financial Information:You’ll be given a way to enter your financial information, like a worksheet, a Google Form, or special software.
• Follow-Up Discussions:After you send your financial information, you can expect to talk to your adviser again. Depending on the type of agreement you have—hourly or retainer—particular or full payment may be needed before we start talking.

 

By following these steps, you can streamline the process of hiring a financial advisor who aligns with your financial goals and personal aspirations.

 

Bottom Line

Given the complexities and ambiguities within the financial advisory industry, it’s essential to exercise due diligence when selecting a financial advisor who aligns with your fiduciary and financial needs. Ensuring that your chosen advisor is trustworthy and well-suited to your specific requirements can make a significant difference. The right financial advisor can not only help you achieve your financial goals but also provide financial protection for your loved ones and their future. Taking the time to carefully choose a qualified advisor is a critical step towards securing your financial well-being.