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8 Traits to Look for When Choosing a Financial Advisor


Working with a financial advisor can make it easier to clarify your goals and develop a plan for reaching them. But what makes a good financial advisor? There are certain traits and characteristics that successful financial advisors share. Knowing what to look for can help you find the right advisor to work with. Once you’ve connected with a financial advisor, you can begin mapping out a strategy for building wealth.

What Does a Financial Advisor Do?

Financial advisors help their clients to create a plan for reaching their financial goals. The types of things advisors can help with include budgeting, debt repayment, retirement planning and college savings. Some advisors offer advice to a variety of clients from different backgrounds, while others choose to niche down and focus on a specific type of client.

A financial advisor may hold different certifications attesting to their knowledge, skills and experience. A certified financial planner (CFP) designation, for example, can provide broad financial planning advice. A registered investment advisor (RIA), on the other hand, is primarily concerned with offering advice about investments.

Financial advisors can work for large wealth management firms, insurance companies or brokerages. They can also operate independently and run their own boutique businesses. In exchange for their services, financial advisors are paid a fee. A typical advisor fee is 1% of assets managed per year.

Some advisors are fee-only, meaning they only charge fees for the services they provide. Others are fee-based, meaning they collect fees based on the products or services they recommend. Either type of financial advisor may be a fiduciary, meaning that they’re obligated to act in the best interests of their clients at all times.

What Makes a Good Financial Advisor?

8 Traits to Look for When Choosing a Financial Advisor

If you’ve never worked with a financial advisor before, you may not know what to look for when choosing one. There are some clues that can make it easier to separate the good from the bad. Here are some of the most important traits to consider when looking for a financial advisor to work with.

1. Experience and knowledge: If you’re working with a financial advisor, it’s likely because you’re relying on their expertise to help you create a workable plan for managing your money. An advisor who’s experienced and knowledgeable is in a better position to formulate a strategy that’s tailored to your needs and objectives.

Asking an advisor what certifications they hold and how long they’ve been in business can give you insight into their background. You can also use a tool like FINRA BrokerCheck to research an advisor’s credentials and past history.

2. Transparency: Transparency is an important trait for a financial advisor to have, particularly when it comes to fees and how they’re paid. It can be easier to trust an advisor who’s open about their fee structure and isn’t reluctant to answer your questions about how their business operates.

If you’re asking basic questions about fees, communication or an advisor’s track record and are met with murky answers or no answers at all, that’s a sign that you may want to look elsewhere for advice.

3. Good communication: A good financial advisor prioritizes communication with clients. When vetting advisors, it’s helpful to ask how often you can expect them to stay in touch, what their preferred methods of communication are and who you can go to with questions if they’re unavailable.

Your advisor should be able to answer all of your questions thoroughly and return communications in a reasonable time frame. If you’re waiting weeks for a response to a call or email, that’s a sign your advisor may not value good communication.

4. Holistic planning: Every advisor has a different style but it’s important to choose one who looks at your financial situation holistically. A good advisor takes time to get to know you and your needs in order to create a comprehensive plan for managing your money. Instead of recommending that you do X, Y or Z right off the bat, they’ll take an in-depth look at your income, assets, debts and goals so that any advice they offer is specific to you.

5. Professionalism: Professionalism is a must when working with a financial advisor because you’re counting on them to guide you. Hallmarks of a professional advisor include dressing the part, assuming a friendly but courteous demeanor, returning calls or emails in a timely manner and being respectful of who you are as a person.

You may also want to look for an advisor who is a fiduciary for your peace of mind. Fiduciary advisors are held to a higher ethical standard with regard to how they advise their clients. If you’re unsure whether an advisor is a fiduciary or not, you can ask them and then verify their status through BrokerCheck.

6. Personality: Advisors are more than just the products they recommend or the services they offer. There has to be some personality there as well; otherwise, you might find financial planning so boring that you don’t even bother to do it. It’s also important for an advisor’s personality to mesh well with yours.

If you’re an introvert, for example, you may find dealing with an extremely extroverted advisor difficult. Extroverts, on the other hand, may find an introverted advisor to be too reserved for their tastes.

7. Reputation: The best financial advisors let their reputation do the talking for them. Instead of spending lots of time on marketing and trying to attract clients, they have clients coming to them thanks to referrals and word of mouth.

A simple way to gauge an advisor’s reputation is to ask. If you have friends or family members who work with an advisor, ask them what they like or don’t like about them. Reading online reviews is also a way to see what other people have to say about an advisor.

8. People first approach: Good financial advisors know that it’s people, not profits, that matter most. An advisor who’s tuned in to your needs is focused on finding the right solutions, rather than simply pushing one product versus another. These are the advisors who are able to build trust with clients, which is an important element to have when you’re asking someone else to guide you financially.

Bottom Line

8 Traits to Look for When Choosing a Financial Advisor

What makes a good financial advisor? It isn’t just one thing; instead, there are numerous traits that a good financial advisor can possess.

Choosing an advisor to work with can take time, but it may be worth the wait to find one that checks off all the boxes listed above.

Financial Planning Tips

  • If you’re meeting with a financial advisor for the first time, it helps to have a go-to list of questions prepared. For example, you can ask them about their background and credentials, their fee structure, their investment style and the type of clients they typically work with. Finding a financial advisor also doesn’t need to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Robo-advisors can be a cost-efficient alternative to working with a human advisor. You can join a robo-advisor platform and get an investment plan created for you, using a special algorithm. The main advantage is cost savings since robo-advisors tend to charge lower fees than human advisors.

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