The key to finding the best financial advisor is to find one that aligns with your goals. For you to find this person, it’s important to get at least three referrals and meet with all of them.
If you have an interest in investment advice, you want to talk with a financial consultant of a brokerage firm or registered investment advisor to develop your portfolio. You may also want an advisor that can offer advice on other things besides investments such as home buying, budgeting, college funding, taxes, insurance, etc.
Perhaps you’re interested in making investments but on your own; there’s no need for the assistance of an investment advisor. However, you could still want one for any of the situations as mentioned earlier. There’s no need to hire an investment-focused advisor if you’re not doing any kind of investments.
If you hire an advisor, you will pay for their services. However, do not sign anything until you inquire about the compensation arrangements to ensure you understand what is in the contract.
Commissions – Brokerage firms typically charge a sales commission on trades made. If you make a limited number of trades, this could be financially beneficial for you.
Fees – Investment advisors and brokers may charge you fees based on the investment assets being managed. Yearly fees can run up to two percent. This means a $500,000 investment could mean a $5,000 to $10,000 maintenance fee. Fee-based accounts are not subjected to trade commissions, which means the broker has no reason to build sales commissions. They do, however, want to grow the account so the management fee increases too.
Other Arrangements – If an advisor won’t manage the money, there’s no reason to have an asset-based fee account. For total financial advice, it may be best to hire an advisor on an hourly fee or yearly retainer.
No matter what your financial needs, be sure to find an advisor that will meet your goals and will be paid, that’s best for your situation.