Factors to consider while selecting a financial advisor


A financial advisor assists with investment decisions, account management, and financial planning, reducing stress over fund growth. Various types include those specialising in planning, investing, retirement, or robo-advisors with automated services. To select the right advisor, understand needs, determine budget, research credentials, choose the right advisor type, and ensure clear communication. Advisors align financial strategy, build trust, and aid in retirement planning amid market fluctuations. Choosing wisely is crucial for success; thorough research and compatibility lead to peace of mind and improved money management.

Are you planning to make your money grow, but are not sure how to invest it strategically? Hiring a financial advisor could be a good start in that endeavour. From helping you build a solid portfolio to ensuring that your financial goals are successfully achieved, a financial advisor can help you in more ways than one. A disciplined process will enable you to get your personal finances in order and accomplish both short- and long-term objectives. As per Statista, 35% of Americans availed the services of financial advisors in 2022 to guide them with their investments.

In this article, we will share with you some tips on identifying the right financial advisor. So, let’s start with the basics.

Who is a financial advisor?

A financial advisor can help you make investment decisions, monitor them, and manage your accounts. In other words, they would help you with money matters and allow your funds to grow without letting you stress over it. 

There are various types of financial advisors, and you need to hire based on your requirements. Some financial advisors stick to providing financial planning services but refrain from giving investment management services. On the other hand, some might have expertise in retirement income planning or wealth accumulation. You can also hire robo-advisors, which provide affordable, automated investment services. Most have in-depth know-how in helping individuals through preconstructed diversified portfolios of exchange-traded funds. You can read more about robo-advisors here.

Things to do while choosing a financial advisor

The big question is how to choose the most efficient, resourceful financial advisor who serves your purpose and matches your budget. Here are five things that you should do to hire the right financial advisor. 

Understand your financial needs

To begin with, you should understand and analyse your requirements before hiring a financial advisor. You should identify the areas that you need help with. People generally hire financial advisors to streamline their funds, get financial advice on investing, understand taxes better, create estate plans, diversify portfolios, make pay checks last longer without having to struggle every month, etc. Some people need clarity on whether to invest in stocks, bonds, exchange-traded funds (ETFs), or some other instrument. Once you understand and establish your priorities, you can go ahead with the search for a financial advisor. Do not shy away from asking questions about their experience or areas of expertise. Remember that the more questions you ask, the lower would be the chances of last-minute hiccups. 

Decide your budget

Once you have understood your goals, the next step is to evaluate how much you can pay for availing the services of a financial advisor. Financial professionals provide a wide range of fee structures nowadays; so, ensure that you hire an advisor that offers a payment plan that suits you. A financial advisor might take a one-time charge or may charge a percentage fee. If you hire someone who is buying and selling products on your behalf, they might ask for a fee that is equal to 1-2% of the transaction value.

Research the market thoroughly

Once you have analysed your financial needs and spending capacity, check the credentials and customer feedback of the financial advisor. You can even leverage search engines to identify financial advisors with specific criteria. You can also look for references from your close friends and colleagues. To ensure that someone is legitimate and has an impressive service record, you should check their compliance history as well. Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), and the Certified Financial Planner (CFP) Board of Standards are some of the organisations that can help you with records. They should be licensed and certified to practice this profession.

Decide the type of financial advisor you need

As mentioned earlier, there are several types of financial advisors, such as a fee-only advisor, a fee-based advisor, a commission-based advisor, and a registered investment advisor, to name a few. So, take your pick after an adequate understanding of each.

Have complete clarity

To achieve financial success, ensure that you and your financial advisor are on the same page, and you are completely satisfied with the answers. If you get vague or incomplete answers, you should look for better options. A competent financial advisor should be able to keep your financial strategy on track while enabling you to make informed decisions. A good financial advisor is also empathetic and is able to establish trust-based relationship.

Wrapping up

Hiring a financial advisor can help you build a corpus, plan your post-retirement life, and protect your close ones. Market volatility is another reason why you should plan your financial goals at every step of your life.

If you haven’t hired a financial advisor already, it is high time you do so. With the help of a financial advisor, you can streamline your money management and enjoy peace of mind. Take your time while searching for and selecting a financial advisor as a wrong choice can cost you a fortune. Review your goals, get recommendations, scrutinise their background, and make sure you ask all the required questions.


The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.

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