February 1, 2022 Last updated February 1st, 2022 1,854 Reads share

Top Tips for Finding a Financial Advisor

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Financial advisors can help take you and your finances far — but only if you find the right one for you. Working with a credible, knowledgeable, and prepared advisor can help you fix financial issues, save big for retirement, and sort out the perfect budget that is tailored to your exact needs. Finding an advisor who can help you meet your goals takes a little preparation and research but can go a long way in leading a financially smarter and healthier life. Here are the top five tips to help you get there.


Understand Your Cash Position

Creating a budget is usually the first step in understanding the basics of your financial needs. Understanding what you have coming in versus what you have going out. People often mistakenly think of their day job as the only source of revenue. But even middle class households have other potential revenue streams, like a rental, or even some dividend stocks. Likewise, it can be fairly difficult to capture your cash outflows. If only we made all payments via debit and credit cards, we could simply download our payment transactions into an Excel workbook each month. Cash is still king, and we take for granted just how often we use it. A few dollars here, a few dollars there, and before you know it half of your total disposal income has gone out the door in a hundred minuscule cash transactions throughout the month. This is why creating a budget is the key to starting a financially prudent life.

Know Where You Need to Fill The Gaps

Unfortunately, our income does not always meet our expenses. If it did, we probably wouldn’t have a consumer debt problem in America. Budget ‘gaps’ are usually broken down into two factions.

First, how can you immediately cover the shortfall in covering your payments? You may find that the expense is already committed, and it’s simply a matter of paying for it. In this instance, borrowing the money may be the most financially prudent option. There are many different loan options out there, and it can be hard to settle on one. A popular option overseen by many advisors is a personal loan. These are loans given by private lenders, often with flexible repayment options and low-interest rates. Financial advisors can help you find the best personal loan choice so you can avoid taking out too much and have to deal with even more finance headaches in the future.

Second, you need to manage and control your debt. Borrowing money, be it from family or friends, is all well and good…if you have a plan for paying it back. Perhaps it involves debt consolidation help, following Dave Ramsey or Suze Orman’s advice, or maybe you need the assistance of a personal financial advisor. Most will find that the convenience of a local financial advisor, that you can meet with face to face, is a valuable resource to lean on.

Settle on the Right Type of Advisor

It’s also important to be aware of the different types of advisors. Common ones include retirement income advisors, financial planners, and investment advisors. This is where it helps to know what needs you have at the moment. If you don’t have any current issues and would like more general financial advice, it’s a good idea to begin with a financial planner who can go over all of your finances with you.

Examine Credentials

There are many people who can teach you how to make and spend money, but not all are created equal. Some individuals fear working with a financial advisor due to the risk of fraud. It’s essential to examine an advisor’s credentials, looking for reputable ones like CFA (chartered financial analyst) or CFP (certified financial planner). Advisors who have these credentials have taken the necessary exams, proving their understanding of the financial subject and have agreed to follow a strict code of ethics.

Understand Advisor Compensation

It’s always recommended to go with a fee-only financial advisor or planner. Advisors who work on commission will always be tempted to steer you towards investment decisions that are more financially lucrative for them. The National Association of Personal Financial Advisors is a great resource for finding reputable local professional you can work with on your financial planning needs.

Ask the Right Questions

When meeting with potential advisors, it helps to go in asking the right questions right off the bat. Besides looking into credentials, history, and experience, you can ask about an advisor’s philosophy of financial risk. You have to ensure you and your advisor are on the same page when it comes to financial decisions, such as how much you want to invest, save, and put into various endeavors. Being aligned benefits both of you and leads to a more successful financial future.

Justin W

Justin W

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