6 Essential Steps to Hiring a Financial Advisor

A “fiduciary” is a person who is committed to putting their clients' best interests before their own. They are required to avoid conflicts of interest, disclose any potential conflicts of interest and to provide all relevant facts to their clients. Every financial advisor on SmartAsset’s matching platform is a fiduciary. If your advisor isn’t, be mindful that they aren't held to the same standards and may not necessary give recommendations that are right for your particular situation. If that’s the case, use our free tool today to get matched with an advisor that is held to the fiduciary standard.

RWhile it may be tempting to hire the first advisor you meet, don’t. Selecting a financial advisor is a serious decision. Going with the office conveniently positioned on your drive to work, or the Google listing that ranks first, may seem like a simple choice, but aren’t always good indicators of quality. Instead, take care to interview multiple advisors and pick the one who best aligns with your priorities.

Like doctors, some financial advisors operate general practices. Others, however, specialize in more niche lines of work, such as retirement planning, small business financial planning, or high-net-worth estate planning. While most are perfectly capable of offering other types of advice, it’s best to find a fiduciary with the right expertise for your specific situation.

Financial certifications are signifiers of expertise in a certain aspect of the financial industry. Those seeking a certification typically need to complete hours of coursework and then pass an exam. They also need to abide by professional ethics standards. Holders of certifications need to take continuing education courses in order to maintain their knowledge as well as their certification. 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.

Every financial advisor will be compensated for the services they provide for you; the only difference is in how that compensation is structured. Some are “fee only,” charging a flat rate for their services regardless of transactions. Others levy a percentage-based fee based on the total assets they manage. Others earn commission from mutual funds or other financial products, which present conflicts of interest. The bottom line? Make sure their fee structure isn’t inversely aligned with your interests and financial success.

Unlike filtering through online reviews of a new restaurant, or soliciting feedback from friends about handyman services, financial advisors are more challenging to vet independently. That’s why it’s imperative that anyone considering the services of a financial advisor ask for help in the decision-making process.

Our free tool makes it easy to find a qualified financial advisor. After answering a few simple questions, you’ll be matched with up to three qualified fiduciaries that serve your area. The entire process takes just a few minutes, and your first consultation could be as soon as today.