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What is a Financial Advisor?
A Financial Advisor is a finance professional who provides consulting and advice about an individual’s or entity’s finances.
Financial advisors can help individuals and companies reach their financial goals sooner by providing their clients with strategies and ways to create more wealth, reduce costs, or eliminate debts.
Financial advisors help people manage their money and reach their financial goals.
They can provide a range of financial planning services, from money management and budgeting guidance to investment management.
Some financial advisors have additional certifications or expertise that allow them to help with complex financial topics, such as estate planning, insurance needs or tax preparation.
Finding the right financial advisor for your situation is key — doing so means you won't end up paying for services you don't need or working with an advisor who isn't a good fit for your financial goals.
Here are Four steps to help you choose a financial advisor for you.
Step 1.
Identify your financial needs
Before you start looking for the right advisor, reflect on what you're hoping to get out of that relationship.
Financial advisors provide a wide range of services, so it's a good idea to know what you need help with before you begin your search.
Some advisors may specialize in particular areas of finance, such as debt management or investment advice, while others may provide holistic help, guiding you on everything from savings goals to retirement and estate planning.
Step 2.
Understand the types of financial advisors
Financial advisors go by many names: investment advisors, brokers, certified financial planners, financial coaches, portfolio managers. There are even financial therapists.
Some of the most common titles advisors use, including the term "financial advisor" itself, aren't tied to any specific credentials, so don’t assume that someone who uses an official-sounding title has any specific training or credentials.
Step 3.
Consider how much you can afford to pay an advisor
Financial advisors have a reputation for being costly, but there is an option for every budget.
It's important to understand how much a financial advisor before you commit to services.
How much you should spend on a financial advisor depends on your budget, assets and the level of financial guidance you need.
Step 4.
Vet the financial advisor's background
No matter what title, designation, certification or license an advisor claims to have, it’s on you to vet the advisor’s credentials and experience.
Always verify any credentials they claim to have and check to see if they've had any disciplinary problems such as fraud.