What is a Financial Advisor and How to Choose One?

Posted on 19th September 2023

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Using a financial advisor is a great way to manage your money better. 

These money-management professionals aren’t just for the super wealthy. There are financial advisors for every person, business, budget, and issue. 

If you’re considering hiring a financial advisor, this article can help. We’ll discuss exactly what a financial advisor is, what they can do for you, and how you can choose the right one for your needs.

What is a Financial Advisor?

A financial advisor is a qualified professional who can help you with various money management issues:

• Financial management.
• Starting or growing your business.
• Investment advice.
• Budgeting help.
• Saving goals.
• Retirement planning.
• Tax planning.
• Getting out of debt.

Financial advisors offer everything from one-off advice to extensive financial planning, regardless of whether you’re an average Joe or a business professional. 

The duties of a financial advisor are broad but individuals tend to specialise in certain areas. 

If you’re planning to start a business, for example, you’ll need an advisor who specialises in business financing.

If you’re looking to invest, find an investment advisor. These advisors have more extensive qualifications in managing securities. They can help you build investment portfolios, recommend solid investments, manage your investments, and even trade stock for you.

How to Choose a Financial Advisor

Choosing a financial advisor can seem daunting, but don’t panic! We’re here to demystify the process. 

What Are Your Needs?

First, consider what kind of help you need. 

For instance, if you only require a small amount of general financial advice, you might not even need a financial advisor. 

Charities like Citizens Advice UK and government services like the Business Support Helpline offer free and impartial financial advice. Plus, there are plenty of websites with generalised financial advice to get you started. 

There are also robo-advisors, which are free or very low-cost and take a contact centre solutions approach to financial advice. Robo-advisors are AI-powered financial advisors that take the information you input and generate advice based on your requirements. 

Figuring out exactly how much help you need is important. For budgeting and debt management advice, for example, hiring an investment advisor isn’t going to get you anywhere.

So, look at the services financial advisors offer and check off your exact needs. Create a profile of your perfect financial advisor and then dive into the wonderful world of research. 

Do Some Research

Now you know what kind of financial advisor you need, it’s time to look for them.

But with the wealth of information out there, how do you get started? Try following the tips below.

• A simple web search will bring up financial advisors in your area. Services like Google will offer reviews and locations.
• Comparison websites like VouchedFor use filters to help you narrow down your search.
• Review sites like Yell contain reviews.
• Searching for financial advisors on social media can be risky, but it can be a good way to verify someone. Social media offers a level of transparency into a person that reviews alone can’t. And social media engagement can tell you a lot about how they work. 
• Governments have certification boards for financial professionals. Some let you search for financial advisors there.
• Ask people. Word-of-mouth recommendations are worth their weight in gold. Your friends, family, or industry peers might have recommendations and advice on who to avoid.

Don’t just choose the first financial advisor to pop up in a web search. Make sure they fit all of your criteria, are well-reviewed, and have the proper qualifications. Also, determine whether you prefer in-person meetings or whether you’re willing to utilise remote working technology like RealVNC to connect online. Opting for a remote financial advisor can really widen your options.

Make Sure Your Advisor Has the Right Qualifications

Which leads us to the most important part of choosing a financial advisor—are they legit? 

Because the term “financial advisor” isn’t protected, anyone can call themselves a financial advisor and charge you for the privilege. You could risk getting bad advice, ripped off, or even totally scammed out of your money. 

If you’re working with an independent advisor, looking into their certifications and qualifications is a good start. If you’re considering a firm, make sure they’re utilising HR software solutions to hire the best of the best.

In the UK, look for financial advisors that have at least level 4 or above of the National Qualifications and Credit Framework. Also look for an up-to-date Statement of Professional Standing (SPS), which should be renewed annually. This means your advisor has completed 35 hours of training each year and has signed up to a strict code of ethics. 

These certifications can differ by country or province. In the U.S., for example, you should look for financial advisors who have a Certified Financial Planner (CFP) certificate. CFP-certified financial advisors have a fiduciary duty to protect their clients. 

If you’re looking for investment advice, be even more rigorous. 

Investment advisors in the U.S. must be registered with the Securities and Exchange Commission (SEC). In the UK, look for advisors registered with the Financial Conduct Authority (FCA).

Always check your local qualifications and certifications to make sure your chosen advisor is up to scratch.

Get Information Up-Front

You’ve settled on your financial advisor. Now it’s time to chat with them.

In your initial meeting, the financial advisor should tell you:

• If they are independent or work with a firm.
• Their fees.
• Their qualifications and certifications.
• The advice they can realistically offer you.
• Any products or services they use and recommend.
• If they keep sensitive records like financial transactions and monitoring calls.
• How to make a complaint if you’re unhappy.

If your advisor refuses to follow any of these, walk away and go back to the drawing board.

Conclusion

Using a financial advisor can help you to save, invest, pay down debt, plan for later life, and manage your business. But it takes some time and research to find the right person for the job.

Consider your needs, do some research, and rigorously vet everyone to ensure full confidence in your financial future.