How to find the right financial advisor for you
Nathaniel Sillin | 8/9/2016, 1:21 p.m.
If having a dedicated professional to help you manage your money sounds appealing, consider looking into a financial advisor – regardless of your income. There's no substitute for financial education but an expert advisor can help you with your financial goals.
There are many kinds of advisors who are trained to help you with many different
aspects of your finances. Here are some of the most common ones:
Financial counselors work with you collaboratively to help you identify goals and
potential solutions to your personal financial problems. They can help you
understand complex monetary issues and improve how you manage your money. Consider finding a certified financial or debt counselor to fit your needs through nonprofit organizations like the Association for Financial Counseling and Planning Education http://www.afcpe.org/, or National Foundation for Credit Counseling https://www.nfcc.org/.
Investment advisors can provide a wide range of services, whether it's helping you plan for your retirement or advising you on how to manage your investments. You pay for their services with either a flat salary or a percentage (typically 1 percent) of the assets they manage for you. To learn about the basics of investing and
investment products, visit the U.S. Securities and Exchange Commission (SEC) Investor website [https://investor.gov/investing-basics/guiding-principles].
Broker-dealers or stockbrokers do many of the same things that investment advisors do, but it's important to note that their job is to persuade clients to buy or sell financial products such as bonds, stocks and ETFs. Unlike investment advisors, they're paid on commission – the more transactions you make, the higher their pay. For detailed resources and advice for investors [http://www.finra.org/investors/avoid-common-investor-problems], visit the Financial Industry Regulatory Authority (FINRA) website.
Tax advisors or tax preparers are specially trained in tax law and work to make sure everything goes smoothly when tax season rolls around. They ensure you pay your fair share, but also that you're not paying more than you need to. They are typically
paid by the hour or for a flat fee depending on the specific service. The Internal Revenue Service government website offers in-depth advice [https://www.irs.gov/uac/newsroom/irs-offers-advice-on-how-to-choose-a-tax-preparer] for choosing a tax advisor and provides forums to file complaints or reports [https://www.irs.gov/tax-professionals/make-a-complaint-about-a-tax-return-preparer] if any issues arise.
Once you've determined the kind of financial advisor you would benefit most from, make sure you find the right one by considering these seven tips:
Check their credentials. When your money is at stake, it's crucial to make sure your advisor is accredited and legitimate. If you're considering a potential stockbroker, FINRA has a search tool [http://brokercheck.finra.org/] that allows you to see a broker's employment history, licenses, complaints against them, and more. You can also search for information on investment advisors [http://www.adviserinfo.sec.gov/] on the SEC government website.
Understand the differences between advisors held to a fiduciary or a suitability standard. Investment advisors held to a fiduciary standard are legally obligated to act in your best interests. Advisors who are registered to provide services under a
suitability standard are obligated to choose investments that are suitable for you. However, this doesn't mean that advisors who work under a suitability standard are not good options – regardless of which standard they're held to, advisors with