Having an advisor can be incredibly useful no matter what you’re doing in life. If you want to get into finances, having a financial advisor at your side is smart; with their help, you’ll be able to reach your financial goals with expert advice and knowledge on your side. You can’t just choose anyone for your advisor, though—the type of advisor you choose will depend on your goals and needs. When you’re looking for an advisor, you should be knowledgeable enough that you don’t hire someone unnecessarily or who doesn’t work well with you.
Types of Financial Advisors
There’s more than one financial advisor at your disposal, ranging from robo-advisors to in-person advisors. There’s no right or wrong type of advisor to have, since the type you hire or use will be dependent on your reasons for looking in the first place.
- Robo-advisor: Robo-advisors are digital services that offer simplified, low-cost investment management. This is a low-cost option with little to no account minimum, letting you start investing with a small sum of money. They’re best for investing for financial goals such as retirement when you can’t afford or don’t want to complete a financial plan.
- Online advisors: Online financial advisors are virtual planning services that connect you with human financial advisors. These services connect you with a team of professionals that you can consult with when you have questions and are a good halfway point between robo-advisors and traditional advisors. Online advisors are great when you need an advisor and a holistic financial plan at a lower cost than traditional advisors.
- Traditional advisors: Traditional advisors are certified financial planners, stockbrokers, registered investment advisors, and more. Unlike the other two options, you’ll meet with traditional advisors in-person. This option is the most costly of the bunch, some even requiring a high minimum balance, but are the best option if you want a specialized service or have a complex situation you want to consult about.
Once you figure out what type of advisor you want and what service you’ll need, you need to consider how much you can afford to pay an advisor. Traditional financial advisors are the most expensive of the lot, but they’re also the most specialized; robo-advisors are the cheapest, but also very general. Take a look at what you can realistically afford before committing to any one advisor or service.
Finally, make sure to vet your financial advisor’s background. Look for the record of the company or person you’re considering hiring through the firm’s Form ADV—it’ll highlight how the firm or advisor charges for its services, any conflicts of interest, and any past disputes you should be aware of.