how to choose financial advisor

How to Choose a Best Financial Planner/Financial Advisor 2021


Last Updated on 01/01/2021 by Deepak Singla

There are many people who need a financial planner or a financial advisor to get suggestions on how to invest, grow, or save money. They help people to meet their financial goals to a great extent.

The Internet is growing rapidly with the passage of time. There are many financial planners who are available in the market or in online portals from where you can take their help, but they are not trustworthy.  Nowadays, we see a lot of fraud and scams happening each year   and so you have to be very careful about it. The best financial advisor will guide you on every step you take. They will help you with how you should invest your money and where you should invest your money. There are many financial planners out there in the market, but it depends upon whom you will choose as your advisor

Make sure that the financial planner you select is trustworthy. It is because you are dealing with a very important aspect of your life and the person is a complete stranger to you.

There are various factors that you should consider while choosing the right financial advisor for you. You also need to check your budget because there are some professional financial advisors who would charge a huge amount of money.   Hence, keep these things on your mind when you start looking for your financial advisor.

How to Choose the Best Financial Planner

First, you need to ask yourself that why you need a financial advisor and for what reason. Do you need them to manage your money, plan your investments, or to save your money? As per my suggestion, you should hire a professional   since they are more experienced

Let’s look at the following suggestions on how to choose the best financial planner who can help you in the long run.

1.   Vet Your Financial Advisor:

Before hiring any financial advisor, you need to check their profile thoroughly so that you don’t waste your money. There are many financial advisors out there in the market and they charge a fee as per their knowledge and experience.

Check out the track record of all the financial advisors carefully and choose the one that suits your requirements.. You can also take the interviews of the financial advisors to know each of them in detail.

2.   Choose Which Services You Want:

This is the most important factor that you need to consider before hiring a financial advisor.  Keep in mind your requirements and then choose accordingly.

If you want someone to manage your investments then choose an advisor who has expertise in managing funds. If you want an advisor who can save your money then choose an advisor who is an expert in saving money, and so on.

Also, learn everything you need to know from them properly so that in future you can handle these things on your own.

3.   Understand the different types of Financial Advisors:

It is very important to understand the type of financial advisor you are hiring. Basically, there are 3 types of financial advisors- fee-only, fee-based, and commission-based.

I). Fee-Only: these types of advisors have experience in asset management and comprehensive financial planning. They provide more comprehensive advice on insurance planning, education funding, taxes, investing, retirement, estate, etc.. However, they don’t receive any kind of fees or commissions from insurers or other financial product sellers.

ii). Fee-based: Fee-based advisors are very new in this financial world. They are similar to the commission-based advisors and are usually affiliated with an agent/broker. They hold a license to sell insurance or investments for a commission. They are paid directly by their customers for their services. On the other hand, they get paid commissions by selling their products. This structure is known as a fee-based type of financial planner.

iii). Commission based: Commission based is another type of financial advisor who can be a registered representative, an insurance agent or a broker. They sell financial products such as insurance, annuities, or mutual funds, and receive commissions on those products. Their prime income depends upon what they are selling. Also, they are not required to disclose conflicts of interest. This is a very important part of the financial planner industry that you must know before hiring them for yourself or for your family members.

4.   Consider the Pay Structure:

Pay structure is also a very important factor. It is important for anyone who wants to hire a financial planner to save money or manage their finance properly.  You can only give to the extent you can afford it.

It is not like that the more you pay money, the better you get. Some young financial planners can also give the best advice to you.

5.   Verify the Advisor’s Credentials:

We should thoroughly check the credentials of the financial advisor before we choose them.

But the question arises that how will you verify the advisor’s credentials? Do not worry about it.   As there are various sites available on the internet from where you can verify the financial advisor’s credentials for free.

These free sites provide the detail of each financial advisor and firm in-depth. On the other hand, these sites will also display the disciplinary actions that the financial advisor has received in the past. Thus, this is one of the best ways to choose a financial planner for yourself and for your family members.

6.   Interview Various Financial Planners:

You should interview various financial advisors before choosing the financial planner as per your requirements.

After interviewing each financial advisor, you will be able to understand clearly the opinions or views of the advisor and if you are suitable for you or not.

It is very important to establish good rapport with your financial advisor. Unless you are comfortable with the financial planner, you will not be able to discuss your financial problems with them openly Hence, a good rapport with a financial advisor is necessary so that he can solve all your problems.

7.   Discuss Your Requirements With the Financial Planner:

It is also very important to discuss your requirements with the financial planner. This will help you to build a strong bond with him/her.

Whether you want to manage your funds or learn ways to save it for the future, the financial planner has all the answers.. But it is essential to discuss your requirements clearly with them. This way, you will be clear while choosing the best financial planner for yourself or others.

8.   Know What Kind Of Service You Need:

Usually, a financial planner will give you two options- either he/she will meet you personally, or they will discuss issues with you online.

You can choose whatever option you want. But the first one seems to be a little expensive as the financial planner has to visit your residence to discuss your problems with you… You can choose any of these options according to your budget. But keep in mind that if you want to choose the first option, then you need to have a high budget.

Since most people are not comfortable discussing their financial problems online, they spend more money and call the financial planner at their home.

The Final Thoughts

Therefore, now you know how to choose the best financial planner for yourself or for your closed ones. Read the above suggestions carefully so that you don’t make any mistake while hiring your financial advisor.

A financial planner or advisor is essential for most people as they are unable to manage their funds properly. Childless individuals who have property, and are over 55years of age, need a financial planner to a great extent. However, other people also require a financial planner if they are very busy with their job or business.

It is advisable to choose an experienced and professional financial planner since they have already dealt with tough situations regarding the finances of various families.