Choosing the right financial advisor can have a major impact on your financial future. Whether you’re planning for retirement, investing for the first time, or navigating a complex financial situation, the right advisor can help you build a strategy and stay on track. With so many options available, it’s important to understand what to look for and how to find a fit that matches your needs and goals.
6 steps to choose a financial advisor
Wise takeaways
- Take time to understand the various types of financial advisors, such as CFPs, RIAs, and robo-advisors, to find one that aligns with your financial goals.
- Before choosing an advisor, clearly define what services you need — whether it’s budgeting help, retirement planning, or investment management.
- Factor in how much money you’re planning to invest and what you’re comfortable spending on advisory fees, as costs and minimums can vary widely.
- Always research an advisor’s credentials, check for complaints or disciplinary actions, and confirm they act as a fiduciary before committing.
Step 1. Understand different types of financial advisors
Not all financial advisors offer the same services, and titles can be misleading. Knowing the differences will help you choose someone who fits your needs and goals.
- Financial coach: A good starting point for those who need help with basic money habits like budgeting and saving. Coaches aren’t licensed to manage investments but can help build financial literacy and offer accountability.
- Certified financial planner (CFP): A CFP has passed a rigorous exam and is trained in budgeting, debt management, insurance, and retirement planning. They’re ideal for creating a long-term financial plan.
- Registered investment advisor (RIA): Registered investment advisors focus on managing investment portfolios. They typically offer ongoing guidance, including rebalancing and risk management. You can verify their credentials on FINRA’s BrokerCheck.
- Financial consultant: This title is less regulated, but some hold a Chartered Financial Consultant (ChFC) designation. Like CFPs, they can offer broad planning services — but make sure to confirm their qualifications.
- Wealth advisor: Designed for high-net-worth clients, wealth advisors manage large portfolios and often provide a full suite of services, including estate planning and tax strategy. Minimum investment requirements are usually very high.
Looking for a robo-advisor?
Founded in 2008, Wealthfront is a robo-advisor that offers access to automated index investing to easily put your funds on autopilot. Beyond investing in curated portfolios of ETFs and mutual funds, you can use Wealthfront's other financial services, like a high-yield savings account, bond portfolios, and individual stocks, to add greater diversity to your strategy.
Wealthfront also works with many retirement products like Traditional and Roth IRAs, so you can invest funds with its automated programs while enjoying tax breaks.
Step 2: Identify the services you need
Most financial advisors offer a mix of services, but not every advisor specializes in the same areas. Before you choose one, think about what you actually need help with — whether it’s building a budget, managing investments, or planning for retirement.
Service
What it involves
Best for those who...
Investment management
Managing your portfolio, rebalancing assets, and aligning investments with your goals and risk tolerance.
Want help building and managing a diversified investment portfolio.
Retirement planning
Estimating income needs, setting savings targets, and choosing the right retirement accounts (IRAs, 401(k)s).
Are focused on preparing for long-term financial security.
Tax planning and preparation
Identifying tax-saving opportunities and possibly filing returns.
Want to reduce your tax burden and keep more of your earnings.
Budgeting and debt reduction
Creating a spending plan, paying off debt, and building healthy saving habits.
Need help managing day-to-day finances and improving cash flow.
Estate planning
Working with an estate attorney to set up wills, trusts, and beneficiary designations.
Want to make sure your assets are passed on according to your wishes.
Take a moment to jot down your priorities and financial pain points. If you’re trying to eliminate debt, look for someone with budgeting expertise. If you’re focused on long-term growth, an advisor with investment or retirement planning experience is a better fit. Keep these goals in mind as you compare options — the best advisor is one who meets your specific needs.
Step 3: Determine how much you're ready to invest
Some advisors have minimum investment requirements — especially traditional firms and wealth managers — while others, like robo-advisors, let you start with as little as $5.
Think about how much you’re comfortable investing right now. The amount you plan to invest can help narrow down your options:
- Under $1,000: Consider robo-advisors or tech-assisted platforms.
- $10,000 or more: You may qualify for custom advising with personalized service.
- Over $100,000: You’ll likely have access to full-service advisors, including wealth and estate planning.
Step 4: Understand your budget for financial advice
Before you choose a financial advisor, make sure you understand how they charge for their services. Fees can vary widely based on the type of advisor and the level of service, and they’ll impact your overall returns.
Fee type
How it works
Best for those who...
Percentage of assets under management (AUM)
You pay an annual percentage of your investment balance, typically 0.5% to 1%.
Want ongoing investment management tied to portfolio size.
Flat fees
A set amount you pay annually or monthly, regardless of portfolio performance.
Prefer predictable costs and comprehensive financial planning.
Commissions
Advisor earns a commission when they sell certain investment products.
Are OK with potential conflicts and want low or no upfront fees.
Retainer fees
You pay a recurring fee (monthly or quarterly) for access to ongoing planning services.
Need regular check-ins but not day-to-day investment oversight.
Step 5: Research potential financial advisors
Check credentials and qualifications
You can confirm licensing and background information using FINRA’s BrokerCheck or the SEC advisor database. When it comes to professional designations, look for things like:
- CFP® (Certified Financial Planner): Trained in comprehensive financial planning
- RIA (Registered Investment Advisor): Licensed to manage investment portfolios
- CFA® (Chartered Financial Analyst) or CPA: For specialized investment or tax expertise
Verify fiduciary status
Ask if the advisor is a fiduciary — someone legally required to act in your best interest. This is especially important if you want conflict-free advice, since non-fiduciary advisors may recommend products that benefit them more than you.
Look for reviews and complaints
Researching reviews for advisors that you're interested in can reveal any red flags, poor service patterns, or unresolved complaints. Search for the advisor or firm on:
- Better Business Bureau (BBB)
- Consumer Financial Protection Bureau (CFPB)
- Review platforms like Trustpilot or Google Reviews
Ask the right questions
When you meet with or contact a potential advisor, be ready to ask:
- What’s your investment philosophy?
- How often will we meet or communicate?
- How do you tailor your advice to each client?
- Are there any conflicts of interest I should know about?
Empower is a financial advisory best known for its retirement planning services, but it also gained a reputation for its high-powered digital tools after acquiring Personal Capital in 2020. Today, anyone can use Empower's financial tools for free with an online account, which includes investment tracking, goal-setting, and budgeting. For the personal touch, Empower also offers clients a team of dedicated financial advisors for a yearly fee of over $100,000.
WiserAdvisor is an online directory that helps connect you to certified financial advisors throughout the USA. With a free account, you can search WiserAdvisor's database to find qualified advisors in your area and see whether they meet your expectations.
It's free to schedule your initial consultation with an advisor through WiserAdvisor, but each provider has unique fee stipulations and minimums. WiserAdvisor also lets you fill out a questionnaire with your financial goals to automatically match you with an advisor with relevant credentials and experience.
Step 6: Make your choice and take action
After researching and comparing different options, you should know which financial advisor to work with and how to allocate your funds. Also, remember you don't have to spend all your money with one advisor.
It's possible to work with multiple advisory services to take advantage of different specialties, services, and fees. For example, you could work with a personal CFP for help with budgeting and sign up for a robo-advisor to enjoy low fees on investments.
If you decide to work with one or more financial advisors, be sure you account for an exit strategy. While not advisable, sometimes life happens and you need to withdraw money from an advisory account. The only way to prepare for unpredictable scenarios is to review penalties for early withdrawal and factor them into your investment plan.
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Miranda Marquit
Freelance Contributor
Miranda Marquit is a journalism-trained freelance writer and professional blogger specializing in personal finance.
Eric Esposito
Freelance Contributor
Eric Esposito is a freelance contributor on MoneyWise with an interest in financial markets, investing, and trading. In addition to MoneyWise, Eric’s work can be found on financial publications such as WallStreetZen and CoinDesk. When not researching the latest stock market trends, Eric enjoys biking, walking his dog, and spending time with family in Central Florida. Eric holds a BA in English from Quinnipiac University.
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