How to Choose a Financial Advisor

Choosing a financial adviser might seem daunting but if you need help with a financial decision it’s worth persevering. A good adviser can save you money and a lot of worry.

The key to finding the right financial adviser is working out what type of advice you need.

Decide What You Want From Financial Advice

Before you get financial advice, decide what you want to get out of it. This depends on your stage of life, how much money you have, and what you’re trying to achieve.

A financial adviser can help you make financial decisions and plan for the future. This might include advice about budgeting, investing, super, retirement planning, estate planning, insurance and taxation.

Types of Adviser

Financial advisers come in different guises and aren’t always called ‘financial advisers’.

Sometimes they are named by their specialism such as ‘mortgage adviser’, ‘investment adviser’, ‘pension adviser’ or ‘financial planner’.

Sometimes they are known as ‘brokers’ – often when dealing with products such as:

  • mortgages
  • home and car insurance, or
    investments including shares.

Whatever they might be called (or call themselves), what all financial advisers in the UK do have in common is they’re regulated by the Financial Conduct Authority (FCA).

This means there are rules they must follow when dealing with you.

Find a Financial Adviser

Once you know what you want, find an adviser who offers the right services for you.

You can look for a financial adviser through their professional associations:

Financial Planning Association
Association of Financial Advisers
Or you can try recommendations from people you know.

Run a background check on your planner.

Start with these two questions: Have you ever been convicted of a crime? Has any regulatory body or investment-industry group ever put you under investigation, even if you weren’t found guilty or responsible? Then ask for references of current clients whose goals and finances match yours.

Determine what you can afford

As with all financial matters, choosing a financial advisor will often come back to cost. It’s not only what type of financial advisor you need, but also what type of financial advisor you can afford.

In-person financial advisors have three ways they can earn compensation: through an annual, hourly or flat fee; through commissions on the investments they sell; or a combination of a fee and commissions.

Annual fees based on assets under management are the most common fee structure for financial advisors. While financial advisor fees average 1% per year, they’re often charged on a sliding scale. The more assets you have with the advisor, the lower your fee will be. This means that as your assets grow over time, the cost of your financial advisor will diminish.

Robo advisors can also use a fee-based structure, but they’re usually far cheaper. Most robos charge between 0.2% and 0.35% of assets per year, unless you want access to a human advisor. In this case, the fees can be as much as 1.5% per year.

Human advisors can also charge flat fees for individual services. For instance, you might pay $2,000 for an advisor to create a financial plan for you. After the plan is created, however, you’re usually on your own to implement it, unless you want to pay for continued advice.


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