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Working With a Financial Advisor Online


A financial advisor can help you shape a plan for managing your money, including saving and investing for retirement. Traditionally, you’d need to meet with a financial advisor in person to get advice, but these days many financial advisor firms allow you to connect with a professional online. Working with a financial advisor online has its pros and cons, but it might appeal to you if you’re interested in getting advice in a way that’s convenient and cost-effective. And after the coronavirus pandemic, many people are more open to virtual client-advisor relationships. If you’re thinking of working with an online financial advisor, try finding one through SmartAsset’s free matching tool.

What Does an Online Financial Advisor Do?

Working with a financial advisor online isn’t that different from working with an advisor face-to-face. The difference is that instead of going to your advisor’s office to get financial advice, interactions take place online. Communication methods can vary from one advisor to the next but that may include email, live chat or video conferences.

In terms of the range of services an online financial advisor can offer, they may help with things like:

  • Creating a household budget or fine-tuning a budget you already have in place
  • Developing a plan to pay off credit cards, student loans or other debt
  • Discussing your goals for retirement and creating a plan for saving and investing
  • Maximizing opportunities to save and invest in both tax-advantaged and taxable accounts
  • Offering advice about specific investments
  • Offering guidance on college savings, including 529 plans, Coverdell Education Savings Accounts and how to manage withdrawals to avoid negative tax consequences
  • Long-term financial planning, including discussions around life insurance, annuities, social security benefits and the need for long-term care insurance
  • When to adjust your plan, based on major life events such as a marriage, birth of a child or divorce
  • Estate planning and legacy planning, including what documents you need and how to minimize taxes

In short, an online financial advisor can help you create a comprehensive plan for managing your finances as you move through different life stages. Every advisor is different in terms of what they specifically offer, but this can give you an idea of what you might be getting in exchange for your time and money when working with an advisor online.

Online Financial Advisors vs. Robo-Advisors

You may hear online financial advisors and robo-advisors discussed in the same circles but they’re not exactly the same. An online financial advisor is an individual or company that offers financial advisory services through an online platform. In other words, when you work with a financial advisor online following this definition, you’re getting financial advice from an actual person.

A robo-advisor, on the other hand, is a financial advisory platform that relies on computer algorithms to offer people guidance on money decisions. Typically, you would answer a questionnaire online telling a robo-advisor what your goals are, your risk tolerance and your timeline for investing. The platform’s algorithm would then use those answers to create your investment plan.

Robo-advisors can be some of the least expensive options for getting financial advice but they often lack the human touch. That’s where an online financial advisor can have the edge, particularly if you’re looking for completely personalized financial advice. A financial advisor can also help with managing emotion-based decision-making, something a robo-advisor isn’t equipped to do.

Pros and Cons of Working With a Financial Advisor Online

Financial Advisor Online

Like anything else, there are advantages and disadvantages to consider when getting financial advice from someone online. On the pro side, here are some of the biggest benefits of using an online financial advisor:

  • Financial tracking may be easier: With a traditional advisor, you may have to wait for a quarterly update to check your financial progress. An online advisor, on the other hand, may offer a digital dashboard you can use to keep tabs on your financial situation at any time. They may also offer other helpful tools, such as online calculators, to help you manage your finances.
  • Response times may be quicker: It can be easier to communicate with your advisor when they’re available via email, live chat, video chat or instant messenger. And they may be able to respond to your questions faster, versus waiting for them to return a phone call or schedule an in-person meeting.
  • Fees may be lower: Every financial advisor charges fees differently. An online advisor may come with a lower price tag if they have fewer overhead costs. Fewer fees means you get to keep more of your investment earnings over time.

On the other hand, keep these potential cons in mind:

  • May feel impersonal: While an online financial advisor can offer advice tailored to your situation, you may still feel a disconnect if you never actually meet them in person.
  • Quality of advice can vary: Online financial advisors aren’t all the same, so it’s important to compare them carefully before choosing who to entrust with managing your finances. And it’s important to recognize upfront whether you’re dealing with an actual person or a robo-advisory firm when seeking out financial advice online.

How to Choose a Financial Advisor Online

Choosing a financial advisor to work with online isn’t that different from choosing one to work with in-person. It all comes down to doing your homework and asking the right questions.

For example, when comparing online financial advisors you’ll want to pay attention to things like:

  • What financial services and specific types of financial advice they offer
  • What their overall investment strategy or approach is like
  • How they deliver financial advice (i.e. live chats, emails, messenger, etc.)
  • What kind of online tools they offer to help you manage and track financial accounts
  • How often they communicate and how accessible they are to their clients
  • What kind of fee structure they follow and how much you can expect to pay for their services

It’s also helpful to take a closer look at their professional background and credentials. For example, a certified financial planner (CFP) and a registered investment advisor (RIA) aren’t necessarily the same when it comes to the type of advice they offer or the ethical guidelines they’re bound to follow. Navigating the alphabet soup of financial designations can be a little overwhelming at first but it’s helpful to know the basics so you understand what type of financial advisor you’re working with.

Bottom Line

Financial Advisor Online

Getting financial advice online can save you time and potentially save you money as well. While it’s not the traditional way to manage your finances, digital advice is gaining in popularity. In fact, more financial advisory firms are moving some or all of their services online. Taking time to research advisors first can help you find the one that best fits your needs and budget.

Tips for Choosing a Financial Advisor

  • Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Some online advisors may specialize in retirement accounts such as a 401(k) or individual retirement accounts (IRAs). Others may also offer advice on investing through taxable brokerage accounts. If you have a mix of different accounts, it’s helpful to know how different advisors approach managing them.

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