Whether you want to retire in 20 years or send your kids to private school, financial goals require a skilled professional. A financial advisor is an expert in saving, investing, and tax strategy.
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- Personality
A financial advisor’s personality is the foundation of any relationship. They need to be transparent and honest and ensure you understand everything they do for you. They should be willing to listen and answer questions and take the time to help you create a holistic plan that is customized to your specific needs and goals.
The best financial advisors are passionate about their work. They keep up with industry trends, changes to tax law, and investment opportunities, and they are always looking for ways to improve their client’s experience. This zeal helps them remain competitive and makes them more effective at their job.
While extraversion is often seen as a trait for a good financial advisor, it’s not necessary to excel at this career. Studies have shown that introverts can be just as successful. This is because introverts are more comfortable cultivating one-on-one relationships and analysing information alone. This may explain why they’re often better at building trust with their clients.
Another important personality trait for an advisor is empathy. They should be able to relate to the difficulties of the financial landscape, and they should understand their clients’ concerns and motivations. They should also be willing to make compromises in order to ensure the best outcomes for their clients.
Finally, great financial advisors have integrity. They’re honest about their fees, prioritize communication with their clients, and follow a code of ethics that puts their clients’ interests first. If you ever feel like your advisor isn’t acting with integrity, it might be worth reconsidering their services. NerdWallet recommends researching an advisor’s education, experience and reputation before hiring them. You can use our free tool to compare the background, qualifications and reputation of potential advisors.
- Fees
Choosing an advisor who charges fees you can comfortably afford is a key factor in forming a healthy advisor-client relationship. Many of the best financial advisors charge a flat rate to manage your assets and provide holistic wealth management services, such as estate planning and tax planning. These fees can range from 0.5% to 1% of your total assets, depending on the services offered and your account size. Typically, an advisor’s fees decrease as your account size grows.
It’s important to understand an advisor’s fee structure, including what they’re charging for and whether or not they have a fiduciary duty to put your interests before their own. You should also be aware of any hidden fees, such as commissions or soft costs that may be incurred when investing in certain products.
One of the most common ways an advisor makes money is by recommending and helping you invest in mutual funds and exchange-traded funds (ETFs). These investments come with their own set of fees, which can add up over time. When you’re researching fees, make sure to compare apples to apples so that you’re not overpaying for a service or underpaying for a better one.
The best financial advisors should be transparent about their fees and services. They’ll likely outline their costs in a written contract that will be sent to you once you select them.
SmartAsset has reviewed hundreds of the top financial advisor firms based on their fees, services, fiduciary status and more. Use our free tool to match you with up to three vetted advisors who can help you reach your goals. This review includes information about the firm and its financial professionals, including their investment philosophies, office locations, fees and minimum investment amounts.
- Experience
The best financial advisors have a lot of experience in their industry. They know how to manage a client’s portfolio and create an investment strategy that works for them. They also understand how to communicate with clients and keep them updated on their portfolios and investment performance.
In addition to their education and certifications, many financial professionals have gained experience through their jobs or internships. This helps them to be better able to understand the needs of their clients. It’s possible to get a job as a financial advisor straight out of college, but most employers prefer candidates with some professional experience, whether it comes from an internship or another job in the field.
Aside from their experience, the best financial advisors are able to keep up with changes in the industry and adapt to the unique needs of their clients. They also have a passion for finance, which helps them learn and evolve with the profession. They are constantly gaining knowledge, which is important in an industry where standards, laws and strategies are always changing.
When choosing a financial advisor, look beyond the certifications and compare fees, services and investment philosophies. It’s also important to evaluate communication skills and make sure they are a good fit for your goals. For example, some financial advisors will help you with all aspects of your finances — budgeting, saving for retirement and debt management — while others may be experts in one particular area. Using SmartAsset’s Advisor Finder tool, you can find local advisors who have been reviewed by other users and determine if they are the right fit for your situation. In most cases, the top financial advisors will work with you on a long-term basis to help you reach your financial goals.
- Specialization
Financial advisors often specialize in areas they are knowledgeable about, or they may target groups of clients with similar financial planning needs (e.g., teachers, tech execs, middle-class preretirees). In addition, many financial advisors focus on serving only a certain age group, or they may offer services to people with particular income levels, investment goals, life stage or family circumstances. These niches help financial advisors develop a deep understanding of the issues and opportunities that their clients face.
Some of the best financial planners also hold formal accreditations, such as the Certified Financial Planner (CFP) credential or a chartered financial analyst (CFA) designation. These credentials require rigorous industry study, examination and adherence to ethical standards. Other popular designations include the registered investment adviser (RIA) and certified public accountant (CPA). You should always verify an advisor’s credentials and licenses using FINRA’s BrokerCheck.
Choosing a financial advisor is one of the most important money decisions you will make, and the best ones are knowledgeable, trustworthy and transparent about their fees and processes. They will understand your situation, work with you to establish your goals and provide a clear plan to help you reach them.
When selecting an advisor, ask trusted friends and family members for recommendations. You can also use a financial advisor matching tool, like SmartAsset’s, to find a qualified professional in your area. Make sure the advisor you choose is a fiduciary and will put your interests first, and interview at least three potential advisors before making a decision. In addition, it’s important to research an advisor’s background, fee structure and disciplinary history on FINRA’s BrokerCheck. Lastly, you should know whether the advisor is paid on a commission basis or with a flat fee.
- Communication
A financial advisor needs to have deep understanding and knowledge of the financial world, but they also need to be great communicators. This is because their job involves dealing with sensitive, confidential information that clients trust them with. This information could include details about their personal lives, financial goals, and family finances. The best financial advisors can use this information to build a trusted relationship with their clients, helping them achieve their goals.
Having excellent communication skills means being able to explain complex financial topics in ways that are easy for clients to understand. This includes using relatable examples and avoiding jargon. They also make it a point to engage in active listening, and tailor their explanations to the client’s level of comprehension. In addition, they often incorporate visual aids to further enhance the client’s understanding.
Some clients come to a financial advisor looking for help during tough times, such as a health scare, divorce, or a death in the family. These advisors are able to calm their clients down and help them see the bigger picture. They also normalize the emotions that arise, such as tears or anger, and ask questions to get to the bottom of what is eating away at them.
If you are a financial advisor looking to land your next role, it’s important to highlight your excellent communication skills on your resume. You can do this by including examples of how you have used your communication skills to help clients. This can include rewriting investment strategies that led to higher returns, or hosting workshops to educate clients on how to manage their own finances. You can also show your skills by listing any titles you have held that indicate you are a leader, such as “team lead” or “senior financial advisor.” These titles will catch the eye of hiring managers and prove that you can lead a team of financial advisors.