How to Choose a Financial Advisor

There is a financial advisor for every budget and financial situation. Here's a look at the types of financial advisors, and how to choose the right advisor for you.
How to Choose a Financial Advisor

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Steps

Financial advisors help people manage their money and reach their financial goals. They can provide a range of financial planning services, from investment management to budgeting guidance to estate planning. The you choose will depend on your financial situation and your needs.

Picking the right financial advisor for your situation is key — doing so means you won't end up paying for services you don't need, or working with an advisor who isn't a good fit for your financial goals.

We recommend following this process to choose a financial advisor.

The term financial advisor can apply to a variety of services, ranging from online robo-advisors to local, in-person traditional financial advisors.

All of these financial advisors help you manage your money in various ways:

A robo-advisor is a digital service offering simplified, low-cost . You answer questions online, then computer algorithms build an investment portfolio according to your goals and risk tolerance.

» Ready to compare? Read our full roundup of the 

This is the next step up from a robo-advisor: an online financial planning service that offers virtual access to human financial advisors.

A basic online service might offer the same automated investment management you'd get from a robo-advisor, plus the ability to consult with a team of financial advisors when you have questions. More comprehensive services roughly mirror traditional financial planners — you'll be matched with a dedicated human financial advisor who will manage your investments and work with you to create a holistic financial plan.  and are examples of services in this space.

If you're looking for a personal financial advisor, see our full roundup of the .

Traditional financial advisors include , stockbrokers, registered investment advisors, and wealth managers. The same person can have more than one of these titles. For instance, a CFP may also be a registered investment advisor. If you work with a , you'll typically meet in person in a local office.

» Need some help? Check out our roundup of the

If you simply want help choosing and managing investments, a robo-advisor is a streamlined, cost-efficient choice. It's also good for those just starting out, because robo-advisors often have low or no account minimums.

If you have a complicated financial situation or want holistic advice on topics like estate planning, insurance needs, etc., you might want to choose an online service or a human financial advisor in your area. If you don't mind meeting with your advisor virtually, you may save money with an online service. These services also typically have lower account minimum requirements than a human advisor might.

You'll also want to think about what each service can offer you. For example, if you're interested in , you'll want to ensure your advisor, no matter what kind they are, can help you with that.

It often makes sense to start with a robo-advisor or online planning service — you can always hire a traditional financial advisor if your situation grows more complex.

Financial advisors have a reputation for being costly, but these days there is an option for every budget. It's important to understand before you commit to services. Generally speaking, there are three cost levels you're likely to encounter:

Always check out the record of the company or person you're considering by looking up the firm's . Among other things, this form will outline how the firm or advisor charges for its service (and what the specific fees are), conflicts of interest and any past disciplinary actions.

We also have a list of  — including whether they hold to a fiduciary standard, which requires that they act in your best interest.

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