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Choosing the Right Financial Adviser


Are you in need of some financial assistance? If so, you may have considered seeking the help of a financial adviser. But what exactly does this term mean, and how do you choose the right professional for the job? Let’s dive into what you need to know.

Defining Financial Advisers

A financial adviser is an individual who helps others manage their money. However, it’s important to note that the term “financial adviser” is fairly broad and doesn’t necessarily indicate any particular requirements or qualifications. According to Alana Benson, an investing spokesperson at NerdWallet, anyone can call themselves a financial adviser.

That being said, many advisers undergo extensive training and experience requirements to receive certain designations. Here are a few examples:

Certified Financial Planners (CFPs)

CFPs are professionals who have completed certain coursework, have earned a bachelor’s degree or higher, passed the CFP exam, and demonstrate high ethical and professional standards by completing 6,000 hours of work experience.

Chartered Financial Consultants (ChFCs)

ChFCs have completed college-level coursework and have a strong grasp of various financial planning concepts including estate planning, insurance planning, retirement planning, and more. To maintain their designation, they must also complete ongoing education courses.

Chartered Financial Analysts (CFAs)

Professionals who earn the CFA designation have passed three exams, hold a bachelor’s degree, and have at least four years of professional experience.

When seeking the right financial adviser for your needs, it is important to consider their qualifications and experience. Don’t be afraid to ask questions and shop around before making your decision.

What Exactly Does a Financial Adviser Do?

The responsibilities of a financial adviser may differ depending on the individual or the firm that they work for. Judson Meinhart, a certified financial planner from Modera Wealth Management, suggests that it’s important to inquire about the type of advice a potential adviser will offer before beginning a professional relationship.

Some of the areas in which a financial adviser can help include:

Retirement Planning

A financial planner can provide recommendations regarding retirement funds and offer advice on which accounts should be funded. They can also advise you on safe withdrawal rates and portfolio income during retirement. Ensuring that you have an appropriate investment strategy for retirement is another important role that a financial adviser can take on. This includes balancing the stock market and taking into account your changing spending habits over time. An adviser can also assist with Social Security decisions, determining how much to withdraw from which account, balancing your spending versus legacy goals, and helping you decide what to do with your primary residence.


Determining your cash flow goals and needs is another area where an adviser can assist you. This involves calculating how much money you need every month to cover fixed overhead costs and how much you want to spend on discretionary expenses.

Financial Planning vs. Financial Advising

When it comes to managing your finances, it’s important to understand the difference between a financial planner and a financial adviser. While they both offer financial guidance, they provide different levels of support.

For starters, a financial adviser is responsible for managing an investment portfolio. They will assess your risk tolerance, financial goals, and past investment experience to help you select appropriate investments. They’ll also review the fees you’re paying and evaluate individual stocks to ensure that your investments are worthwhile.

In contrast, a financial planner takes a broader approach to wealth management. They’ll help you develop a comprehensive plan that considers your entire financial picture, from investments to retirement goals. By understanding your lifestyle aspirations and spending habits, a financial planner can recommend specific steps you need to take in order to achieve your desired standard of living during retirement.

Investment Strategies

One key aspect of working with a financial adviser is developing an investment strategy that matches your cash flow needs. That means identifying the right mix of assets―including stocks, bonds, cash, private business interests, and real estate―and ensuring that you’re not investing money you’ll need in the near future.

At the same time, it’s essential to review your existing accounts and evaluate any fees you’re currently paying. An adviser can help you minimize these expenses and identify any investments that may not be worth holding onto.

Overall, whether you’re working with a financial planner or adviser, it’s important to carefully consider your investment strategy and find the right balance between risk and return. By taking a proactive approach to wealth management, you can achieve your goals and enjoy peace of mind along the way.

Tax and Estate Planning

As you plan for your financial future, it’s important to consider tax and estate planning as two essential components.

Tax Planning

The goal of tax planning is to reduce your tax liability in the current year and over the course of your retirement. This could include analyzing which accounts to withdraw from to meet your financial needs. For example, do you withdraw from an IRA and pay taxes, or the Roth and pay no taxes?

It’s also important to ensure that your income does not meet or exceed certain thresholds, as this can trigger additional Medicare charges. Financial planners can offer unique insights into tax planning because they have a good sense of your entire financial situation. They can help you manage your withdrawals from different types of accounts to ensure that you remain below certain target incomes.

Estate Planning

Estate planning involves defining and communicating your goals for your assets and guiding you through making concrete plans. A financial adviser can help you work with trusts and estates attorneys to set up important documents such as wills, trusts, powers of attorney and health care directives.

By working with a financial adviser on both tax and estate planning, you can have peace of mind in knowing that your financial future is secure.

Estate Planning: Why Collaborating with Professionals is Essential

Estate planning involves more than just drawing up a will and leaving your assets to your heirs. It requires careful consideration of various factors that can impact the distribution of your estate. To ensure that your wishes are reflected accurately and to minimize potential conflicts, it is best to collaborate with an attorney.

Apart from working with legal counsel, it is also crucial to engage a financial adviser, according to certified financial planner Terrance Hutchins at Logos Financial Group. A financial adviser can act as a liaison between you, your future generations, and beneficiaries to make sure that everyone is on the same page with your estate wishes. They can also provide valuable insights on the following aspects of estate planning:

Health and Long-Term Care Planning

A financial adviser can help you create a caregiving plan based on your family history and support you in selecting the right type of health insurance plan that aligns with your goals and objectives. Additionally, they can introduce you to pre-vetted contacts who can help you purchase long-term care or Medicare supplement plans.


It’s necessary to consider how much you want to leave behind to your beneficiaries and determine where it should come from. In light of the 10-year requirement for drawing down on inherited retirement accounts, it’s essential to have a plan that reflects the best possible tax consequences for you.

“If you inherited a traditional IRA, withdrawing the entire account after ten years could result in a significant tax bill. However, a financial adviser can help you establish a plan to withdraw the account gradually while minimizing your tax liabilities,” says Hylland.

In summary, collaborating with professionals like attorneys and financial advisers is necessary when planning your estate. Doing so will help ensure that your wishes are appropriately reflected and that potential conflicts are minimized or avoided, thereby protecting your legacy.

Financial Adviser, Planner, Wealth Manager and Robo-Adviser: Knowing the Difference

Financial Planner vs. Financial Adviser

When it comes to financial planning, people often use the terms “financial planner” and “financial adviser” interchangeably. However, while all financial planners fall under the umbrella of financial advisers, not all financial advisers are financial planners.

Essentially, a financial planner is responsible for creating a long-term strategy to help a person realize their financial goals. In contrast, financial adviser is a broader term that includes the work of brokers, bankers, money managers, etc. It involves managing investments, buying or selling stocks and bonds, and creating comprehensive tax plans.

Certified Financial Planner

“Financial planner” can also refer to a “certified financial planner,” which is the most rigorous certification in the field. According to Benson, financial planners offer general financial guidance in addition to investment management services.

Derieck Hodges, a certified financial planner, advises people to ask them about their work instead of getting confused with titles. A typical financial planner constructs comprehensive strategies that involve cash management, debt management, insurance planning, investment advice, tax planning, and estate planning before providing advice on these subjects.

Wealth Manager vs. Financial Adviser

The distinction between wealth managers and financial advisers is often blurred. However, according to Hutchins, a wealth manager usually focuses on investments and maximizing returns based on investing objectives.

Robo-Adviser vs. Financial Adviser

Unlike traditional human financial advisers, robo-advisers rely on computer algorithms to create and manage investment portfolios quickly and efficiently for a minimal fee.

Knowing the difference between each type of adviser could help you determine which one can best assist you in achieving your financial goals.

The Advantages and Disadvantages of Working with a Robo-Adviser

According to Maurice, robo-advisers are online services that provide limited financial or retirement planning and asset management without the involvement or responsibility of human beings. The biggest advantage of working with a robo-adviser is that it tends to be more cost-effective than working with a human adviser.

However, the downside is that it usually offers a basic cookie-cutter platform. Without personalized advice and human interaction, it may not be suitable for wealthier people with more complex issues, says certified financial planner Joe Favorito at Landmark Wealth Management.

Choosing the Right Financial Adviser

When deciding to work with a financial adviser, it’s essential to look for a fiduciary who has a legal obligation to work in your best interest. Make sure to ask the right questions such as:

  • Are you legally held to the fiduciary standard of care?
  • How are you compensated?
  • What do you base your investment recommendations upon?

It’s equally important to like the person and establish a human connection. Personal finance is, well, personal, according to certified financial planner Elliot Dole at Buckingham Strategic Wealth.

If you’re looking for a new financial adviser, there’s a tool that can match you with an adviser that meets your needs.

Understanding Fiduciary Responsibility

When it comes to managing your finances, it’s important to work with someone you can trust. That’s where a fiduciary comes in. A fiduciary is an individual or organization that acts on behalf of their client, putting their client’s best interests ahead of their own.

Certified financial planner, David Maurice at Worthwhile Wealth, explains that being a fiduciary requires both legal and ethical obligations to act in the best interests of their clients. It’s a duty that’s taken very seriously, and ensures that the advice and guidance you receive is always focused on helping you achieve your goals.

The Cost of Working with a Financial Advisor

One of the biggest questions people have when considering working with a financial advisor is how much it will cost. The answer to this question can vary, depending on a number of factors. Where you live, the complexity of your finances, and the type of services you require can all influence the cost of working with an advisor.

There are several fee structures that financial advisors operate under. Some charge hourly fees for their time, others work on a flat-fee basis, and some charge a percentage of the assets they manage on your behalf.

Commission-based Advisors

It’s important to note that not all financial advisors are fiduciaries. Some work on a commission-based model, which means they earn a percentage of the money their client invests or spends on insurance products. These advisors may not always have their clients’ best interests in mind, as their earnings are directly tied to the amount of money their clients spend.

If you’re looking for a financial advisor who will always put your needs first, it’s important to do your research and find a fiduciary who is committed to acting in your best interests. Whatever fee structure you choose, make sure you’re comfortable with the costs and that you feel the advisor is providing you with valuable guidance for your financial future.

How to Choose the Right Financial Adviser for You

When it comes to managing your finances, sometimes it can be helpful to seek guidance from a financial adviser. But with so many different types of advisers and fee structures out there, it can be overwhelming to know where to start. Here’s a breakdown of some common fee structures and factors to consider when choosing a financial adviser that suits your needs.


Fee-only advisers tend to be fiduciaries as they’re only being paid by the client and aren’t earning commissions on pushing certain products usually. This means that they have a legal obligation to act in the best interest of the client.

“A fee-only adviser will be compensated based on a flat, agreed-upon amount whether that is paid one time or via subscription arrangement. They could also be paid based upon a percentage of the assets they manage (AUM) or advise you on, so the larger your account value grows, the more they will be compensated,” says financial planner Hutchins.

As for the amount you can expect to pay, Daniel says, “A flat fee for a financial plan could cost $1,500 to $5,000, an annual retainer can run between $1,500 to $10,000 and assets under management is about 1%.”

Commissions and fees (fee-based)

This fee structure is a blend of product sales like insurance products and annuities and a planning or investment management fee. “Under this model, clients pay fee-based financial advisers a fee-for-service directly and commissions from the sale of insurance products, annuities, or other investment vehicles. It’s a hybrid between the different models. This structure contains the risk of an adviser offering a client products and solutions that may not be in their best interest as the adviser’s compensation is tied to the sale of a product,” says certified financial planner Julia Lilly at Ryerson Financial.  

When choosing a financial adviser, it’s important to determine what fee structure works best for you and your financial goals. Remember, hiring a financial adviser is an investment in your future and can provide valuable guidance when it comes to managing your money. As financial planner Matt Bacon at Carmichael Hill & Associates says, “It’s typically time to hire a financial adviser when the cost of doing it yourself is greater than what you’ll pay them. This isn’t strictly dollar terms, either. Your time, effort, energy and peace of mind all have a cost. So do missed opportunities, so if you believe that having some help along the way is worth the cost, then make the hire.”

The Benefits of Working with a Financial Adviser

When it comes to managing your finances, there may come a point where your situation becomes too complex to handle on your own. This is where a financial adviser can come into play. According to industry experts, hiring a financial adviser may be beneficial for business owners, highly compensated individuals, and retirees who want to make informed decisions about Social Security, Medicare, and portfolio distributions in retirement.

Additionally, if you lead a busy life, a financial adviser can help manage your day-to-day investment and financial planning decisions to ensure that you stay on track. This is especially useful for entrepreneurs and retirees who want to enjoy their golden years comfortably.

Finding the Right Financial Adviser

If you’re in the market for a financial adviser, word-of-mouth recommendations from friends, family, and coworkers can be an excellent starting point. If you can’t find one this way or you want more information about a professional recommended in your network, you can conduct research online through resources like the FINRA BrokerCheck website.

Another option for finding a financial adviser is by using free tools available from organizations like the National Association of Personal Financial Advisors (NAPFA), Garrett Planning Network, XY Planning Network, and the CFP Board. In fact, there are even tools specifically designed to match you with an adviser that meets your needs!

Whether your financial goals involve paying off debt, buying a house, saving for retirement, or expanding your portfolio, a financial adviser can help you get organized and create a plan to achieve your goals.

Questions to Ask a Financial Advisor Before Hiring

Before hiring a financial advisor, it’s important to ask the right questions to make sure they are the right fit for you and your financial goals. Here are some essential questions to ask:

How Do You Get Paid?

It’s important to understand the fees, costs, commissions, or any other compensation the advisor receives. If they are a fiduciary, they should disclose their conflicts of interest.

How Often Do You Meet With Clients?

Knowing the frequency of meetings will help you understand how involved and proactive your advisor will be in managing your finances.

Make sure your advisor is available to answer your questions and concerns whenever they arise.

Do You Create an Initial Comprehensive Financial Plan?

A comprehensive financial plan should be the foundation of your advisor’s services. Make sure you understand what is included in the plan and how it is customized to your needs.

Who Else Will I Be Working With?

Who is Your Typical Client and Do I Fit the Profile?

Knowing the advisor’s target client can give you an idea of their expertise and whether they are the right fit for you.

What’s Your Experience and Credentials?

Make sure you understand the advisor’s experience and credentials to ensure they have the necessary expertise to help you meet your financial goals.

If you’re looking for a financial advisor, consider using a matching tool that can connect you with an advisor who meets your specific needs.

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