A financial advisor helps you create strategies for eliminating financial risk and building wealth over the long term. They are particularly helpful during times of transition, like a new marriage, retirement, or death of a spouse.
As with all things pertaining to your money, be meticulous in choosing the right advisor. It may take some time to research, interview, and decide on the right fit, however, making the right decision the first time will benefit you in the long run.
Decide how much help you need
Hourly consultation: If you have questions around a specific financial situation such as buying a house or selling a business, the best option for you is an advisor who provides hourly consultation.
- PaymentThe advisor will charge an hourly fee and should be able to give you a total cost estimate upfront based on the amount of work.
Comprehensive financial planning: If you need a professional to create a one-time plan to reach your goals, a comprehensive financial planner will look at everything, including insurance, education, investments, retirement, and more.
- Payment: Either an hourly rate or a flat fee based on the amount of work.
Asset management: If you want a long-term financial partner, an asset manager will invest and manage your money, and provide continuous comprehensive financial planning throughout life’s stages and changes.
- Payment: A percentage of the assets they manage for you.
The payment options noted above are common, but variations can also include hybrid options. When selecting a financial advisor, be sure to discuss your options and find a solution that works for you.
Discover your options
Ask for recommendations
Talk to your friends, accountant, or other professional you trust about what you hope to accomplish by working with a financial advisor. Clarifying your goals can help you find the right financial advisor. Consider the recommendations you’re given, but don't be afraid to look on your own as well.
First, research the recommendations you’ve been given. Check out each website to find more information, including employee bios and services offered.
Whether you like the recommendations you were given, felt they weren’t for you, or didn’t ask for any recommendations in the first place, you should always conduct your own research to see who else is out there.
What to look for in an advisor
Education is important, but advisors need to also have experience dealing with real life financial situations.
Visit the Financial Industry Regulatory Authority (FINRA) website to learn how many years of experience the advisor has, how many professional exams they've passed, and whether they have a state license.
There are several licenses and certifications an advisor can have, including the CFP, CFA, CPA, and ChFC.
The Financial Planning Association is the primary membership organization for financial planning practitioners.
Advisors are required to disclose any disciplinary actions and conflicts of interest on their ADV. To access an advisor’s ADV report, you can download it from the U.S. Securities and Exchange Commission (SEC) Investment Adviser Public Disclosure website.
Familiar with women’s financial challenges
The financial planning goals for men and women are essentially the same; financial stability, wealth accumulation, and retirement security. However, there are many unique challenges that women face when it comes to managing finances.
Longer life expectancy
According to the World Health Organization (WHO), women generally live longer than males by six to eight years. This is due to both an inherent biological advantage and behavioral differences between men and women, meaning women need to plan for a longer retirement.
Interrupted work life
When a mother decides to stay home to take care of a child, her career is interrupted and she misses out on potential earnings. A study conducted by LinkedIn found that women who take a break after childbirth leave the workforce for an average of about two years. For women with more than one child, this may happen at multiple points during their career.
Unfortunately, due to the gender wage gap, women usually have less money to invest when funding their retirement. While the earnings gap is shrinking in many fields, women earned an average of 82 cents for every dollar earned by men in 2018.
These challenges put women in a much different situation than men when it comes to investing. Financial advisors whose practice is geared toward working with women are familiar with these challenges.
Most advisors will provide a free initial consultation to tell you about their practice. After you’ve found a few viable options online, meet with each advisor to discuss your financial situation and goals.
Ask if the advisor is a fiduciary. Fiduciaries are required by the SEC to work solely in your best interest. All advisors at Daly & Associates are fiduciaries.
Ask if the advisor has many women clients. As mentioned above, women face different financial challenges than men. It may be important to you to work with an advisor that has experience working with women.
An Ameriprise study found that women want more personal, collaborative advisory relationships. You need to like and trust your advisor. It’s an intimate relationship and much like a therapist, your financial advisor will know your personal details.
If they’re too pushy or don't listen to your questions or concerns, it may be time to move on. The number of advisors you choose to meet with is completely up to you. If you don’t have a great feeling about the ones you’ve met with, talk to more.
Trust your intuition
After you’ve met with your potential advisors, listen to your gut reaction. After all, you’re trusting that this person will manage your finances in your best interest.