How to Find a Financial Advisor or Planner at Any Age

When considering hiring a financial adviser or planner, age matters, meaning your age and your needs at this point in your life. Throughout your life, your goals, income, and circumstances will pull you in a thousand different directions. The financial advisor you have at 29 may not be the right fit for you as you approach retirement. The advisor who helped you save for your children’s education may not be the best one to help you navigate a return to work at age 62.

If you’re just starting out in your career, you may be looking for a finance professional who can improve your financial knowledge and explain how money fits into your life. Topics you might need help with might include managing debt, avoiding future debt, saving regularly, buying a first home, and financial planning for marriage and family.

Over time, your needs and income have likely become more focused and stable. This is when you can save for a child’s education, assess your family income and track what career advancement with higher pay may mean, and start planning for a solid retirement, which may include a second home, generous funds for health costs and travel. .

Key points to remember

  • At the beginning of your professional life, managing your debts and learning to save can be major concerns.
  • Five to seven years into a career, earning a lucrative salary and increasing savings and investments can be in the spotlight.
  • Retired adults may need guidance to stay on track financially.
  • Some retirees may decide they want or need to return to work after consulting with a financial advisor.

Retirement comes with a different set of decisions

As you approach retirement, it may be that all your planning and savings have been made, or you may have decided that an extended working life is the best thing to do because you need more savings, especially pension funds.

In retirement, you may be living off the fat of a well-planned financial life, and then you can have the time, good health and money to spend on something special, like funding a child’s education. or endow an institution. Or you might need or want to return to work.

Along the way, life unfolds without warning, which could upset you and your careful financial planning. That’s why it’s essential to have an emergency fund and the right insurance to keep you afloat, something a financial planner can advise. You could lose a job, get divorced, face a serious illness (your own or that of a loved one), experience a life-changing accident, inherit a large sum of money, or be forced by life circumstances. to adopt a parent’s child or children.

What you need to know about fees

Another point to consider is the fees to be paid for the services of a financial adviser or planner. Surprisingly, however, many clients are confused and unaware of what, if any, they pay advisors for advice, according to a FINRA survey. Investor Education Foundation. The FINRA study found that 17% of investors don’t know what they’re paying in investment fees, 14% don’t even know if they’re paying fees, and 60% of those who work with a finance don’t know. I don’t think they pay for advice.

Naturally, you will pay for the services of a financial adviser. Young investors with limited funds may be more sensitive to adding a financial planner’s fee to their budget. However, this is an area that all investors should pay attention to. Here are five ways financial advisors charge for their services:

  • Financial advisors who charge based on an Assets Under Management (AUM) fee structure will charge their clients a percentage based on the total dollar amount of assets they manage. The more assets clients have, the lower the percentage they pay for advisory services, although the total dollar fee they pay increases.
  • Commission-based financial advisors earn fees or compensation based on product sales. They receive commissions when their clients complete a specific financial transaction that they recommend, such as buying a stock or other asset.
  • Advisors can also charge clients by the hour rather than commissions or a certain percentage of assets under management. Fees can start at $100 per hour and go much higher.
  • Financial advisors who charge a flat fee will frequently provide their clients with a list of services and the fees they charge per service. Do-it-yourself investors tend to pay fixed fees to advisors or opt for hourly rate payment plans. Often they’re just looking for advice from advisors or the ability to use complex asset allocation models.
  • Paid Financial Advisors do not accept commissions or compensation based on product sales. Paid advisors can structure their fees in a variety of other ways. They can charge by the hour, by project, by assets under management or a combination of these. Because their income is not derived from the sale of financial products, fee-only advisors are often seen as less biased and more focused on providing personalized advice to clients based on their financial goals and interests.

Tips to refine your search

Regardless of your age, the same basic steps apply when setting out to find your financial advisor or planner. Among these, the professional’s credentials, experience and ability to explain financial concepts in plain language allow you to be better informed to make the right decisions for you and your family. The National Association of Personal Financial Advisors (NAPFA) offers a checklist on how to assess a financial professional:

  • Discuss with your loved ones what you want to accomplish by working with an advisor.
  • Create a list of advisors, compiled through word of mouth advice, professional organizations or lists. A starting point is the Investopedia 100, our annual list of the top independent financial advisers in the United States.
  • Do your homework on your candidates and find three professionals by reviewing websites and checking for disciplinary action. You can find shortcuts through the Financial Industry Regulatory Authority (FINRA) BrokerCheck site and the Certified Financial Planner (CFP) site, both of which can help you evaluate brokers.
  • Design a list of questions to ask candidates, starting by asking them about their approach, fee structure, and how their work has helped clients.
  • Meet them in person, if possible, or by videoconference.
  • Make sure you feel confident about the experience and references and comfortable speaking with the advisor or planner you choose

What credentials should a financial advisor or planner have?

A qualified financial planner can have three titles, but the first is the most important. He is a Certified Financial Planner (CFP). A CFP is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement (as with 401(k)s). Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is granted to individuals who pass the initial CFP Board examinations and then pursue ongoing annual training programs to maintain their skills and certification.

A better prepared financial advisor holds the Chartered Financial Analyst (CFA) designation. A CFA is a globally recognized professional designation given by the CFA Institute (formerly AIMR – Association for Investment Management and Research) which measures and certifies the competence and integrity of financial analysts. Candidates must pass three levels of exams covering accounting, economics, ethics, money management and security analysis.

If you have a situation that specifically deals with taxes and accounting, you may want an advisor who is also a Certified Public Accountant (CPA). A CPA is a designation for professional chartered accountants. The CPA license is issued by the Board of Accountancy in each state. The American Institute of Certified Public Accountants (AICPA) provides resources on obtaining the license. The CPA designation helps enforce professional standards in the accounting industry. Other countries have equivalent certifications to the CPA designation, including the Chartered Accountant (CA) designation.

What is Generation Z?

Gen Z is the nickname given to the current generation of young people by many demographic researchers. According to the Pew Research Center, Generation Z consists of people born between 1997 and 2012. The oldest of this generation reach the age of 25, and many have now left college, married and started families. They track millennials (born 1981-1996). In the wake of the COVID-19 pandemic, members of Gen Z are facing a more uncertain future than many previous generations have faced.

What is retirement planning?

Retirement planning determines retirement income goals and the actions and decisions needed to achieve those goals. Retirement planning includes identifying sources of income, assessing expenses, implementing a savings plan, and managing assets and risks. Future cash flows are estimated to assess whether the retirement income objective will be achieved. Some pension plans change depending on whether you are, for example, in the United States or Canada, which has its unique system of workplace-sponsored plans.

What is a Financial Advisor?

A financial advisor is a professional who helps people manage their money through investing, retirement planning, estate planning, having children, etc., depending on the qualifications, experience and designations of the advisor.

The essential

It’s wise to have the right financial advisor or planner in your arsenal of professionals who will help you make informed decisions, regardless of your age. Young investors may be more concerned with learning how to limit debt and save more, while retirees still have plenty of financial decisions to make that require professional advice.