Best Financial Advisors

A financial advisor can help you with many different aspects of your finances, but they often have specializations that can help you determine whether they’re a good fit for your needs.

Some financial advisor services you can expect to see include:

• Tax strategizing: Some financial advisors are well-versed in tax laws and can provide you with tax advice.
• Financial planning: Financial planning is useful, especially if you have goals like retiring early or putting your children through college. Working with a financial advisor to create a plan gives you a good idea of what steps you need to take to hit your goals.
• Investing: Investing is a common service offered by financial advisors. Whether you’re working on building your portfolio, buying stocks or preparing for retirement, a financial advisor can help you distribute your assets and invest based on your desired results.
• Wealth management: Wealth management is an all-encompassing service offered by financial advisors. It features general handling of your finances, including security selection and complete financial management.
• Insurance services: Financial advisors can help you determine whether you have the right insurance coverage based on your assets.

A few common financial advisor credentials and titles include the following:

• CPAs. CPAs (certified public accountants) are accountants with additional education and work experience who have passed a certification exam. CPAs serving as financial advisors typically have additional training and handle a range of financial services, including tax preparation.
• Financial planners. Financial planners help individuals and corporations meet their financial and life goals. They may specialize in tax planning, asset allocation, investing, risk management or estate planning.
• Money managers. Money managers oversee investment decisions for a financial portfolio. They generally work for wealthy individuals, mutual funds or pension plans.
• Registered investment advisors. Registered investment advisors (RIAs) are either individuals or firms registered with the Securities and Exchange Commission (SEC) or state securities authorities. They are charged with providing advice and recommendations or writing reports about securities.
• Registered representatives. Registered representatives are also licensed by the SEC. They must pass the Series 7 and Series 63 securities examinations and be registered with the Financial Industry Regulatory Authority (FINRA). These individuals typically work for investment brokerage companies and may also be called stockbrokers or account executives.
• Certified financial planners. A CFP must meet requirements set by the Certified Financial Planner Board of Standards, Inc. These requirements include holding at least a bachelor’s degree, completing coursework in financial planning and successfully completing a comprehensive exam. They have a fiduciary obligation to work in your best interest.
• Chartered financial analysts. This designation is issued by the CFA Institute, which has extensive education, experience and examination requirements. CFA holders demonstrate high levels of competence in investment research and portfolio management.
• Personal financial specialists. The PFS designation is given by the American Institute of Certified Public Accountants (AICPA). Professionals with this title are CPAs with additional training in financial and wealth management.

Financial advisors can charge you in a few different ways:

• Commission-based payments: Financial advisors who work on commission receive a payment when they buy or sell securities on behalf of their clients. Commission fees tend to be higher than traditional AUM fees, generally ranging from 3% to 6% of your investment.
• Flat fees: Some financial advisors charge a set fee for specific services so clients know how much they can expect to pay in advance. For example, some financial advisors charge fees ranging from $1,500 to $7,500 to create a brand-new financial plan.
• Hourly payments: Many financial advisors bill by the hour and may request a retainer fee prior to providing services. Hourly charges vary depending on the financial advisor, but they often start at $100 an hour and go up to $400 an hour.
• Assets under management fees: Financial advisors who manage your complete financial portfolio generally charge a fee that is a percentage of your total assets under management. AUM fees, also called percentage-based fees, are the most common payment structure for financial advisors and generally range from 0.5% to 2% of your total assets under management. Accounts with more assets may qualify for lower fees. Some advisors might even charge a different rate on your first $1 million of assets and then adjust the percentage for the rest of your portfolio.

Pro tip

When you’re comparing financial advisor costs, make sure you look for advisors with reasonable fees. Higher fees aren’t proof of better investment results.

» MORE: Best online stockbrokers for beginners

Hiring a financial advisor can help take your investments to the next level, especially if your money is currently only earning interest in a savings account or certificate of deposit (CD).

However, using a financial advisor does not guarantee that you will earn a profit or that your funds are shielded from market risks.

» MORE: How much do I need to retire?

Many people can benefit from working with a financial advisor, but you should seriously consider working with a financial advisor if you fall into one of the following categories:

• You’re a beginning investor. People who are just starting out in their financial journey can benefit from working with a financial advisor. A financial advisor can provide personal finance advice and education to help new investors accomplish their short- and long-term financial goals.
• You’re going through family and household changes. People who are experiencing changes in household income can benefit from professional financial planning. Changes that may call for financial advice include having a baby, getting divorced, getting a new job or losing a job.
• You’re newly wealthy. If you’ve recently inherited or won a large sum of money, a financial advisor can help you understand and manage your new financial situation.
• You’re a business owner. People who own a business or are thinking of starting one can benefit from using a financial advisor with experience in both personal and business finances.

“Choosing a financial advisor is a personal process that should not be taken lightly. Done well, it can result in establishing a long-lasting professional relationship,” said Eric Unger, president and chief compliance officer of Affiance Financial. “When choosing an advisor, look for one who is committed to earning your trust. Recognize that trust is not a commodity and cannot be shopped for at lowest cost.”

He also recommends finding an advisor who fits your specific needs and goals. A financial advisor should take the time to understand your unique financial situation, aspirations, risk tolerance and time frame.

“Look for a financial advisor that offers clients of similar ages and backgrounds customized planning services. A good financial advisor will not offer a one-size-fits-all financial plan.”

Ultimately, the relationship with a financial advisor is built on trust and collaboration. Taking the time to research and select an advisor who listens to your concerns, educates you about your options and helps you make informed decisions can greatly contribute to your financial success.