• Fri. Jun 21st, 2024

A Comprehensive Guide to Choosing the Right Financial Advisor

Louise Villalobos

ByLouise Villalobos

Aug 27, 2023

Financial advisors provide services aimed at helping people manage their finances in order to realize their financial objectives. But how do you find the appropriate financial advisor? Read this step-by-step guide to learn more.

Step 1: Determine Your Financial Needs

Financial advisors offer varying services. Some focus on investment advice, while others deal with debt management or even estate planning. Therefore, it is important to understand your financial needs before you begin looking for a financial advisor. Here are a few questions you need to ask yourself to help you determine your financial needs:

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  • Do I need help with budgeting?
  • Do I want investing advice?
  • Would I like to formulate a financial plan?
  • Do I need tax help?
  • Do I need help with saving?

Finding the answers to these critical questions will enable you to get the right financial advisor. Some of your needs may only need a robo-advisor, while others may require you to require a traditional or online financial advisor.

Step 2: Learn the Various Types of Financial Advisors

Several names are used to refer to a financial advisor, such as a financial therapist, certified financial planner, broker, investor, portfolio manager, and financial coach. However, these titles don’t mean someone has specific credentials or training, so do not get confused.

Here are the types of financial advisors:

Fee-Only Fiduciary Financial Advisors

These types of financial advisors perform fiduciary duties to their clients. What this means is that they act in the best interest of their clients. Contracting a registered, licensed, fee-only fiduciary advisor gives you the responsibility of paying them directly rather than through commissions from the sale of certain insurance or investment products.

Investment Advisors

A person offering investment advice is required to register with relevant bodies like the United States Securities and Exchange Commission. Therefore, it is important to ask financial advisors to provide a registration certificate before contracting them.

Step 3: Explore the Different Options of Financial Advisors

There are several ways to obtain financial advice. It could be from a robo-advisor, online financial advisor, or traditional financial advisor. Let’s take a closer look at each.


Robo-advisors are digital platforms providing automated financial planning along with investment services. They use computer algorithms to create investment portfolios for users depending on their risk tolerance and goals. What makes robo-advisors attractive is their low cost, as they charge affordable management fees. However, these financial advisors are unsuitable for people looking for thorough financial planning.

Online Financial Advisor

Unlike a robo-advisor, an online financial advisor provides financial advisory services through the Internet without the use of automated programs. This makes it possible for people across the world to access financial planning services from advisors living in different countries. Their fees are cheaper than those charged by traditional financial advisors but higher than those imposed by robo-advisors.

Traditional Financial Advisor

A traditional financial advisor offers their services in a physical location. And since they incur office operation costs, their charges tend to be high. Traditional financial advisors are suitable for people who want to build long-term relationships.

Step 4: Determine the Amount You Are Willing to Pay a Financial Advisor

Before contracting a financial advisor, understanding how much their services cost is key. Here is what you should expect.

Robo-advisors: Charge 0.25% – 0.50% of the assets under management.

Online financial advisors: Charge 0.49% – 0.90% of the assets being managed.

Traditional financial advisors: Charge 1% -1.50% of the managed assets.

Step 5: Assess the Financial Advisor

Regardless of the license or the title a financial advisor claims to possess, you need to assess their credentials and confirm whether they have the required experience. If the financial advisor is from the US, you can ask for their Form ADV to check if they are registered with the relevant bodies.


You do not have to plan for your finances alone now that you know there are financial advisors for every budget. But before working with any, ensure they have the credentials to perform their duties as expected.

Louise Villalobos

Louise Villalobos

Louise Villalobos is an adept writer, renowned for her compelling articles that illuminate and engage. Her prowess in breaking down intricate subjects provides readers with clarity and nuance. With a vast and varied portfolio, Louise has solidified her standing as a distinguished voice in contemporary journalism.