Investing involves risk and no situation is the same. This is in no way intended as a personal recommendation and investment decisions are solely those of the reader.
Get Smart with Your Assets
Terms of Use | Privacy Policy | About Us
© 2019 SmartAsset
SmartAsset is a personal finance technology company that features a financial advisor matching service. Financial Advisors who appear on SmartAsset are from companies with which SmartAsset receives compensation. SmartAsset takes into consideration wealth and location to determine how to match users with advisors. SmartAsset doesn't include the entire universe of Financial Advisors.
Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come.
A 2019 Northwestern Mutual study found that U.S. adults whowork with a financial advisorreport “substantially greater financial security, confidence and clarity than those who go it alone.”
The value ofworking with a financial advisorvaries by person and advisors are legally prohibited from promising returns, but research suggests average additional investment returns can range from 1.5% to 4% more each year.
SmartAsset’s new toolmakes it easy to find the right financial advisor near you in just a few minutes. Our exclusive, no-cost tool matches you with up to three local fiduciary financial advisors that have passed a rigorous screening process. We confirm each is registered with the U.S. Securities and Exchange Commission (SEC) or the appropriate state regulator, possess the proper licenses and have no pending or valid regulatory disclosures within the past 10 years.
Being aware of these seven common blunders whenchoosing an advisorcan help you find peace of mind, and avoid years of stress.
7 Mistakes People Make WhenChoosing a Financial Advisor
7 Mistakes People Make When
Choosing a Financial Advisor
Advisor Match Tool
Save time and reduce risk. Just enter your zip code so you can see qualified financial advisors in your area. It's fast and free.
Get matched with the right advisor
We'll help you compare qualified advisors in your area
Quickscan: Get these questions answered
How do you spot an advisor who doesn't have your interest at heart?
What's the difference between a "fee-only" advisor and a "percentage of assets" advisor?
What is the risk of hiring an advisor who is not a fiduciary (and what is a fiduciary)?
What credentials really matter?
What is the best way to find an advisor?
Michael Carvin, CEO
Posted: 02/26/20 | Updated 3/10/20
2.5-minute read
This research provided by SmartAsset
Our articles and calculators are seen every month by 45 million people
What we do at SmartAsset
The mission of SmartAsset is to provide the best personal finance advice on the web. Our tools and advice are objective and based on the data. We use our patent-pending Automated Financial Modeling to simulate how different decisions will affect you financially. We maintain editorial integrity when evaluating products and clearly label any partner, sponsored or advertising content and placements.
The Webby
Award Honoree
Best User Experience
Benzinga Fintech
Award Winner
Best Educational Tools & Services
1. Hiring an Advisor Who Is Not a Fiduciary
By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.
All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries. If your advisor is not a fiduciary and constantly pushes investment products on you,use this no-cost tool to find an advisorwho has your best interest in mind.
2. Hiring the First Advisor You Meet
While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.
3. Choosing an Advisor with the Wrong Specialty
Some financial advisorsspecialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line.
4. Picking an Advisor with an Incompatible Strategy
Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.
5. Not Asking about Credentials
To give investment advice,financial advisorsare required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.
6. Not Understanding How They are Paid
Some advisors are "fee only" and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them.
7. Trying to Hire an Advisor on Your Own
Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.
Our no-cost tool makes it easy tofind the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have been rigorously screened for regulatory disclosures and to confirm their licenses. The entire matching process takes just a few minutes.
Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come.
A 2019 Northwestern Mutual study found that U.S. adults who work with a financial advisor report “substantially greater financial security, confidence and clarity than those who go it alone.”
The value ofworking with a financial advisorvaries by person and advisors are legally prohibited from promising returns, but research suggests average additional investment returns can range from 1.5% to 4% more each year.
SmartAsset’s new toolmakes it easy to find the right financial advisor near you in just a few minutes. Our exclusive, no-cost tool matches you with up to three local fiduciary financial advisors that have passed a rigorous screening process. We confirm each is registered with the U.S. Securities and Exchange Commission (SEC) or the appropriate state regulator, possess the proper licenses and have no pending or valid regulatory disclosures within the past 10 years.
Being aware of these seven common blunders whenchoosing an advisorcan help you find peace of mind, and avoid years of stress.
1. Hiring an Advisor Who Is Not a Fiduciary
By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.
All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries. If your advisor is not a fiduciary and constantly pushes investment products on you,use this no-cost tool to find an advisorwho has your best interest in mind.
2. Hiring the First Advisor You Meet
While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.
3. Choosing an Advisor with the Wrong Specialty
Some financial advisorsspecialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line.
4. Picking an Advisor with an Incompatible Strategy
Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.
5. Not Asking about Credentials
To give investment advice,financial advisorsare required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.
6. Not Understanding How They are Paid
Some advisors are "fee only" and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them.
7. Trying to Hire an Advisor on Your Own
Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.
Our no-cost tool makes it easy tofind the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have been rigorously screened for regulatory disclosures and to confirm their licenses. The entire matching process takes just a few minutes.
Quickscan: Get these questions answered
How do you spot an advisor who doesn't have your interest at heart?
What's the difference between a "fee-only" advisor and a "percentage of assets" advisor?
What is the risk of hiring an advisor who is not a fiduciary (and what is a fiduciary)?
What credentials really matter?
What is the best way to find an advisor?
Quickscan: Get these questions answered
What's the difference between a "fee-only" advisor and a "percentage of assets" advisor?
What is the risk of hiring an advisor who is not a fiduciary (and what is a fiduciary)?
What credentials really matter?
What is the best way to find an advisor?
How do you spot an advisor who doesn't have your interest at heart?
This research provided by SmartAsset
Our articles and calculators are seen every month by 45 million people
What we do at SmartAsset
The mission of SmartAsset is to provide the best personal finance advice on the web. Our tools and advice are objective and based on the data. We use our patent-pending Automated Financial Modeling to simulate how different decisions will affect you financially. We maintain editorial integrity when evaluating products and clearly label any partner, sponsored or advertising content and placements.
