Avoid These Missteps to Choose the Best Financial Advisor

Avoid These Missteps to Choose the Best Financial Advisor

When you hire someone to change the oil in your car or remodel your house, you can see the impact of their work right away. If it’s not up to your standards, you can demand a refund or hire someone else.

With a financial advisor, you might not realize the effects of following poor advice for decades. That’s why taking your time to research several financial advisors before deciding to hire one is so important. We outline several common mistakes people make when selecting a financial advisor below.

Staying with an Incompatible Financial Advisor

Business relationships change all the time. What started out as a promising relationship with your new advisor feels like it’s been turning sour for a long time, yet you don’t end it. Perhaps it’s become obvious that you and your financial advisor have incompatible investing strategies and you will never truly be a good match working together.

It’s also possible that you struggle to communicate with your advisor. Despite your request to the contrary, he or she continues to explain things in a way you don’t understand or that feels disrespectful. Don’t worry about hurting feelings in this situation. Your financial advisor would be better off working with more compatible clients while you would feel more comfortable working with someone else as well.

Not Asking or Understanding How Your Financial Advisor Gets Paid

Most financial advisors earn their salary on commission or by using a fee-based model. One thing to be cautious of with the first type is feeling that an advisor is pushing you too hard towards a certain investment because he or she earns a commission from it. On the other hand, a commission-based structure can be more affordable for investors who only want limited assistance.

Those paid a flat fee shouldn’t have a bias but may not know as much about individual products either. Knowing the advisor’s payment structure helps you determine which works best for you and helps to facilitate a trusting relationship as well.

Failing to Research a Financial Advisor’s Background and Credentials

To practice as a financial advisor, a person must earn a bachelor’s degree in an economics related field and pass an exam in their state. The most common financial planning exams include the Series 7, Series 65, or Series 66. Most states also requiring continuing education. According to the National Association of Personal Financial Advisors, consumers should also inquire whether the financial planner has at least one of these advanced certifications:

  • Certified Financial Planner
  • Chartered Financial Analyst
  • Chartered Financial Consultant
  • Personal Financial Specialist

It’s also essential to choose a financial advisor in the right specialty. Some work with only high net worth investors, others with retirees, and still others only business owners. If you feel you need a specialty advisor, ask this question right away.

We are happy to answer any questions you have about Aura Wealth Advisors. Please contact us to request an initial consultation.

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