Finding a financial advisor can be like jumping into deep waters not understanding how to swim. There’s a lot to take on when learning how to manage your money and secure your financial future but don’t let it overwhelm you. To understand how to choose the best financial advisor you first need to understand what type of financial advisor you are looking to acquire. There are three types of financial advisors you should be aware of, commissioned based, fee-based and fee-only. A commission-based advisor is on those sell financial products like insurance, annuities and mutual funds. They receive a commission on the products that they sell and are usually employed by larger institutions. Because they work on commission you have to be careful that you aren’t dealing with someone whose profit through commission means they’re giving you biased suggestions. Fee-only advisors work solely with the best interests of their clients at heart. They make money by charging for their time with hourly rates, flat fees or by contracting a percentage of the profit on the things they manage for you. A fee-based advisor works by partnering with a commission based advisor, agent and similarly sell products and make a commission which means they are driven by products sales and commission as well.

How to Choose the Best Financial Advisor

When you have a better idea of the kind of help you will need you can look at how much help you will need. This means deciding upon whether you want a long term financial planner, comprehensive financial planning or someone who can provide hourly consultation. If you go with the long term you’ll be working with an asset manager who makes a percentage from the work they put in on your money but will also work with you through your life to make the best choices for you. An hourly consultation plan will mean working with an advisor when you have questions surrounding certain life changes and big decisions such as building a home or starting a business or selling one. Comprehensive financial planning means having a financial advisor who is able to create a pathway that shows you which stages you need to reach to attain your financial goals.

When you have an idea of how much time you’ll need your financial advisor for you can then look into the ones available to you. You’ll want to look at their credentials and find if they have the right licensing, there are different stages of licensing that includes a continued education in the industry. You also want to research if they have any criminal marks on their records or unpaid liens. Knowing that your advisor is a trustworthy person can help you move forward in creating a relationship with them. With an idea of their credentials and licensing, you can take a look at how long they have been in the business. You want someone that knows what they are doing and hopefully has been doing it a long time. When you set up a meeting you can determine if they mesh well with you. You want to pick someone that you feel comfortable with and who you can trust so don’t be discouraged if you meet with a few advisors before settling on the one that feels right.