How To Choose A Financial Advisor

You may have read all about financial advisors, financial planners, and wealth managers. As a high-net-worth individual, you understand the value that outside professional advice can bring to your financial situation. You know that when the amount of money involved is large, the stakes are that much higher. You want to work with a financial advisor. 

But one factor that you still need to resolve is this – how to choose a financial advisor. If you are someone who has $10 million or more in liquid investible assets, then make sure you explore this book on choosing the best financial advisor. For quick answers to your question, continue reading this article.

Knowing how to choose a financial advisor is not easy. First, you need to understand their fee structure. Financial advisors make money by charging a fee in return for the services offered. Therefore, one needs to carefully evaluate whether paying such a fee makes sense and whether the benefits derived from the investment advice outweigh the fee. Therefore, the first question we will explore is who should hire a financial advisor. From its payment structure, there is also a distinction between whether they are fee-only or fee-based advisors. They may also charge an annual fee based on the assets that they manage.

Knowing how to choose a financial advisor includes knowing that “financial advisor” is a very broad term. It includes financial planners, portfolio managers, wealth managers, and other professionals that manage assets or offer financial advice. So, it becomes important to understand the types of financial advisors and what each one specializes in. However, when it comes to how to choose a financial advisor, the choice varies from human financial advisors to Robo advisors. A Robo advisor charges much less since it uses a computer algorithm to answer your questions. Pillar Wealth Management specializes in wealth management for individuals with $5 million to $500 million in liquid assets.

Once you have a good idea of the kind of financial advisor that fits your needs, the next step is to figure out how to check the financial advisor’s credentials. How to know if the advisor is genuine and won’t take you for a ride?

Lastly, we will look at some key reasons why Pillar Wealth Management is one of the best online financial advisors. Let’s begin!

6 Crucial Points for Choosing a Financial Advisor     

1. Decide which services you need 

Because different advisors may offer different services, start by clarifying exactly which services are most important to you. Don’t settle for less—if an advisor isn’t a match for your needs, move on to someone else.

The services you may need, which many advisors can assist you with, can include retirement planning, debt management, investing, and estate planning. You may also want help with your tax returns or purchasing insurance.

2. Check backgrounds

Once you’ve found a few potential advisors, you need to find out if they have any disclosures with either FINRA’s brokercheck or the SEC. You’ll want to hire someone with a clean record. The advisor’s Form ADV will reveal the services they offer, the fees they charge, and any disciplinary actions taken against them.

3. Check on credentials 

Verify the advisor’s credentials with the relevant issuing body, such as the CFP Board.

4. Research financial advisor fees

Fee structures vary depending on the advisor. Ideally, your advisor would follow a fee-only compensation model, meaning that their income is derived entirely from client fees. They are less likely to have conflicts of interest.

Always ask about the cost of any product or service your advisor recommends.

5. Create a list of questions to ask

Be prepared with a list of questions to ask a potential financial advisor. You’ll want to know what services they provide and what they cost and what investment options they offer.

Ask them about their background and experience, including the types of clients they usually work with. Find out if they have a particular approach to investments or if they are flexible, depending on the investment.

6. Set up a first meeting with the financial advisor

Be prepared for an initial conversation with an advisor by compiling a list of your income sources and expenses and any liabilities (auto loans, credit cards, etc.), investments, and assets (real estate, valuables). Bring along your insurance policies and recent tax returns.

Financial Advisor Services 

A financial advisor can prepare a financial plan that acts as a framework for achieving your financial goals. It will outline an investment strategy that integrates your preferences and risk tolerance.

Your advisor will monitor your investments and recommend changes as the market and your life situation change.

3 Types of Financial Advisor        

1. Robo-Advisors

Robo-advisors consist of online software algorithms that provide financial advice and place trades on your behalf. Their services are either free or low-cost.

2. Online Advisors

Online advisors offer a combination of digital and human financial advice, but their personalized services may be limited.     

3. Traditional Financial Advisors

A traditional advisor is a real person who works with you to meet your financial goals. You can develop a relationship in which the advisor becomes intimately familiar with your personal and financial circumstances so they can best help you grow and protect your wealth.    

The Benefits of Using a Traditional Financial Advisor 

Because a traditional advisor knows you and understands your needs, you can expect to benefit from that relationship. By maintaining an ongoing conversation with your advisor, you can improve your knowledge and skills in all areas of finance, strengthening your motivation to succeed.

Who should hire a financial advisor?

Advisors usually charge anywhere from a few thousand dollars to a few hundred thousand dollars. If you are wondering about how to choose a financial advisor, you should also know that advisors work with different fee models. Pillar Wealth Management is a fiduciary fee-only financial advisor that works with individuals who have liquid assets between $5 million and $500 million.

If you have a few hundred thousand dollars in assets or even a few million, you know that you have to think about taxes, investment costs, retirement, your legacy, etc. There are many topics related to your money running around in your head. You can either go to separate professionals that specialize in one of these topics. You can go to your accountant for taxes, a portfolio manager for investments, and a financial planner for lifestyle and life goals.

However, wouldn’t it be great to just talk to one person and get everything done in a coordinated manner? Who should hire a financial advisor? The person who wants an integrated solution should. Talk to Hutch Ashoo from Pillar Wealth Management to know how you can benefit from a customer-centric wealth management firm.

If you are someone who has worked with a financial advisor in the past but isn’t happy with the progress, then you need to consider how to choose a financial advisor who is a fiduciary and is experienced at managing high net worth wealth. If you have had an advisor who simply kept changing your investments frequently and incurred high short-term capital gains tax, then you need to know how choose a financial advisor who understands investment costs better. A financial adviser will also help you to manage your credit cards to maintain a good credit score. Get access to this downloadable guide on improving portfolio performance for investors with $5 million to $500 million in investible assets.

If you are looking to save on time and costs or simply want expertise, then working with a financial advisor makes sense.

Some other reasons to hire a financial advisor

Besides the reasons mentioned above, there are some other factors to consider when thinking about how to choose a financial advisor. If you have a decent knowledge of investing and finance but would still like an independent opinion or you don’t want to make any mistakes in making important decisions, then working with a financial advisor makes sense.

If you have multiple things going on and do not have the time to learn about wide-ranging topics on finance, then knowing how to choose a financial advisor, someone who provides financial advice for a living, makes complete sense. At Pillar Wealth Management, we work with high net worth and ultra-high net worth clients every day. We understand what issues are common among high net worth portfolios and have experience in dealing with them.

You can schedule your free consultation with Hutch Ashoo or Chris Snyder to simply explore how financial advisory and wealth management are unique for high net worth and ultra-high net worth accounts. You can also learn about our strategies for high-net-worth clientele.

Generally, the reasons for knowing how to choose a financial advisor are: you want to maximize your investment and you have financial goals that you want to achieve.

Lastly, those individuals who have a diverse set of needs for financial advice should know how to choose a financial advisor who is an experienced and reputed professional. Someone who has to deal with buying or selling a multi-million-dollar property, manage gift tax issues, think about business succession, and also give back to society through philanthropy will clearly have a lot on his/her plate. Every decision can potentially affect many of these financial aspects of his/her life.

Therefore, a trained professional who is adept at understanding all of these issues can contribute positively. Once you know how to choose a financial advisor, you expect the advisor to make decisions that are holistic and sensitive to the impact on all areas of your financial life. Learn How to Choose an Advisor Who Will Stop at Nothing to Help You.

Understand the types of financial advisors

Financial advisor is a general term. It applies to professionals who advise on personal finance. However, a financial advisor could be a wealth manager, a financial planner, a retirement planner, a portfolio manager, an investment advisor, or simply a generic financial planner. If you are thinking about how to choose a financial advisor, then you first need to understand the types of financial advisors.

Knowing how to choose a financial advisor includes knowing that a financial planner is someone who helps plan your financial life. A certified financial planner or CFP is someone who passes a test and is a certified professional to offer financial planning services. A financial planner studies your income, your expenses, your life goals, how much money those goals need, and when you need to fulfill those goals. Based on that, the planner prepares an investment plan. Some tax-related help is also offered in the process.

A wealth manager is similar to a financial planner but focuses exclusively on high net worth and ultra-high net worth clients. In fact, almost all wealth managers have account minimums threshold that they work with. Their expertise also revolves more around handling multi-million-dollar transactions, estate planning, philanthropy, retirement planning, real estate advisory, and all the topics that high net worth individuals deal with.

Knowing how to choose a financial advisor includes understanding that investment advisors and portfolio managers specialize in managing a pool of money. They do not focus very much on the client’s life goal, their standard of living, or how their financial future can be secured. Their focus is mainly on the rate of return that the fund which they manage generates. Instead of providing advice, some investment advisors sell investment products that can benefit the client.

You can read more about the different types of financial advisors in this book called The Ultimate Guide to Choosing the Best Financial Advisor: For Investors With $5 Million to $500 Million in Liquid Assets.

5 Checks to make on the financial advisor’s credentials

To mitigate the chances of working with an advisor that you do not see fit, a background check is necessary before you know how to choose a financial advisor to work with. Once you start to research financial advisors for your needs, you will start to notice the kind of services they offer and the kind of qualifications that they have. Some advisors will be listed on databases like the CFP website, the National Association of Personal Financial Advisors (NAFPA) website, Financial Planning Association (FPA), or the Financial Planning Standards Board (FPSB) website. They may be a member of some other organization. This is one way to check the financial advisor’s credentials.

To decide how to choose a financial advisor, you can also visit websites like LinkedIn and check the educational qualifications, work experience, and general background of the advisor. Any articles or blogs that an advisor has written on popular websites or in the mainstream media also adds credibility. If an advisor ever mentions any memberships that he/she holds, then make sure you ask for the registration number and then later check if the registration is valid.

If you’re wondering how to choose a financial advisor, one factor that adds significant credibility to a financial advisor’s profile is if he/she is a fiduciary. A fiduciary is someone who is registered with either the state regulator or the SEC. A fiduciary is bound to act in the best interest of the client and point out whenever there is a potential conflict of interest. Feel free to start a conversation with Pillar Wealth Management to discuss how being a fiduciary helps the client in the long run.

If you’re wondering how to choose a financial advisor, you can also ask people who have worked with a particular advisor about their experience. If you cannot find someone directly, then you can ask within your personal network if there is any common connection between you and the advisor. Your family, friends, work colleagues, and contacts may know someone that you can speak to. Learn How to Choose an Advisor Who Will Stop at Nothing to Help You.

After checking the credentials, how to choose a financial advisor

Once you feel that you know how to choose a financial advisor and have done your research on the credibility of a financial advisor, you can schedule a one-on-one meeting with the advisor. Having another person handle something as personal as your finances requires trust. The point of meeting the advisor is not only to ask all your questions but also to check out their personality. Is this someone that you can work with? Does the advisor come across as genuine and trustworthy? You can only judge these aspects when you speak with the advisor directly.

We have written a complimentary book on how to choose a financial advisor for individuals with $5 million to $500 million in liquid investible assets. Go ahead and check it out for deeper insights into how to choose a financial advisor. You can also think about what your priority areas are as far as seeking financial advice. Do you want to work with someone who is highly experienced with taxes?

Perhaps, you want advice on selling a multi-million-dollar property that you have in the northeast and retire on an estate in Florida. In that case, someone who has handled property transactions for celebrities or business moguls makes sense. Knowing how to choose a financial advisor includes knowing that it is important to check what expertise a financial advisor has in-house and whether those areas matter to you.

As an element of how to choose a financial advisor, you also want to find out what kind of clients your shortlisted financial advisor works with. If you are a high net worth individual, then you want someone who has worked with clients of a similar profile. If you have $50 million in liquid assets, then you want to work with someone who handles $50 million and $100 million accounts. Financial advisory for every person is unique and there is no one-size-fits-all approach. Therefore, the niche matters as much as the credentials do.

Pillar Wealth Management is one of the best online financial advisors

Before we end this article, we would like to point out a few aspects that are unique to Pillar Wealth Management. Firstly, we make a commitment to save our clients at least $100,000 for every $10 million in assets that clients ask us to manage. Feel free to call us and discuss this unique offering. We also are obsessed with our customer-centric approach. We focus on quality more than volume and that is why we will take on no more than 17 new clients this year. Pillar Wealth Management is one of the best online financial advisors because of our white-glove level of attention.

At Pillar Wealth Management, our philosophy is to help the client reach what we call financial serenity. Financial serenity means achieving your financial goals while sleeping peacefully at night. We want our clients to be comfortable and to know that they are in safe hands. We want them to feel confident that the decisions we make will help secure their financial future.

Hutch Ashoo and Christopher Snyder are the expert founders of independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management. If you would like to speak with them or simply ask any questions about how custom and trusted wealth management advice is offered to high net worth individuals with $5 million to $500 million in investible assets, then feel free to start a conversation.

 

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