How to Choose a Financial Advisor 

Learning how to choose a financial advisor is a very important lesson. 

The consequences of choosing badly range from the disappointing to the catastrophic.

If you choose a financial advisor who is merely inept, you won't make as much money as you could. 

If you choose one who is truly terrible, you could lose a great deal of money. 

If you choose one who is operating with criminal methods, and some do, then you could in fact lose it all. 

Ask for References 

This goes two ways.

First, if you're looking for a financial advisor, you should always talk to your friends and family first.

There is nothing that is more valuable than a first hand recommendation.

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If someone you know and trust has had a great experience with a financial advisor, there is a very good chance that you will have a similarly great experience.

It is even better if you can have that connection make the introduction for you. This establishes a relationship to the planner from the very first time you do business together. 

There is another side to the references equation that you should consider when learning how to choose a financial advisor.

Don't be afraid to ask a potential advisor for references.

If a financial advisor is reputable, and confident in the level of service that he or she provides their clients, they should not be afraid to provide you with professional references. 

Use the Internet 

We now have the most powerful research tool in the history of mankind at our fingertips at all times.

When considering how to choose a financial advisor, it is critical that you don't overlook the power of the internet.

Always Google any potential financial advisors before you do business with them.

If they have been guilty of any misconduct in the past, or if anyone has had any particularly bad experiences with them, you should be able to find that information fairly easily online. 

Look for Certifications 

Always look for a financial advisor that has some sort of a certification.

This shows that they take their career seriously, and that they have put in the requisite amount of time getting educated and certified as a financial planner. 

There are several different types of certifications that are available in the field of financial planning.

One is not necessarily better than the other, but one of the most common certifications is the CFP designation. This stands for 'certified financial planner.'

This certification is a sign of quality in a financial planner, because the standards for obtaining the certification are quite rigorous. 

Interview Multiple Candidates 

When you're learning how to choose a financial advisor this might be the most important tip that you learn.

There are lots of good financial advisors out there. However, not every good advisor is necessarily the best advisor for you.

A lot of this depends on your personal chemistry with the person.

Finding the right fit is so important because there is often no such thing as the 'best' advisor. Instead, its about finding the advisor who's strategy and financial instincts mesh with your goals and risk tolerances.

Certified Financial Planner

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The reason this is important is because your financial advisor can only give you advice.

You are still ultimately the person that has to make decisions about how your money is invested and spent.

If your advisor is an expert, but isn't someone you trust, you will find it very difficult to take advantage of his expertise.

That is why you should interview several different candidates.

Talk with them about their approach to financial planning, and about your own financial goals.

This will help you get a good feel for where the best fit may be. 

Investigate Fees

Another important thing to learn when understanding how to choose a financial advisor is that not all financial advisors charge for their services the same way. Some charge a commission on their services, while others charge a flat fee. 

Both of these models have their pros and cons.

With commission based advisors, you have to be sure that they’re acting in your best interests and not theirs.

However, commission based professionals may be more affordable than those who charge flat rates for their services. This can make them more accessible if you want to start investing with fewer resources. 


Learning how to choose an advisor isn't all that hard. It does however, take some time and patience.

This is one area where you don't want to skimp on the work involved however.

The payoff of finding someone who is competent and who can help you grow your wealth is well worth a little work beforehand. 

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