Money is one of the most important aspects of life. And, since not everyone is an expert in managing finance, many individuals consider working with a financial advisor. A financial advisor helps you manage your money wisely and reach your short- and long-term financial goals. They can even act as your investment advisor, helping you make profitable decisions. If you’ve never worked with a financial advisor before, choosing one can be daunting.

To help you choose the right advisor for your needs, continue reading.

Determine what help and services you need

Before you start looking for a financial advisor, you must be clear about the areas of your financial life that you need assistance. This will help you clearly understand and communicate your needs during your first meeting with your potential advisor. You might also want to consider the type of services you want from the advisor. For example, do you want a financial planner who can help you chart a course for all your financial needs or a retirement financial advisor who can help you manage your wealth after retirement?

Decide which type of advisor you want

A financial advisor is a broad term that can include everything from a traditional in-person advisor to an online Robo-advisor. Different advisors help you manage your money in different ways. In general, there are three types of financial advisors.

• Robo-advisors: These are digital advisors that provide financial advice or manage investments with minimal human intervention. It’s a great option when you need limited financial help, or you’re on a shoestring budget.
• Online advisors: Online advisors offer similar services to Robo-advisors, except that you can consult with a team of human financial advisors whenever you need them.
• Traditional advisors: These can be registered investment advisors, certified financial planners, wealth managers, or a combination of all of these and more. Traditional advisors offer comprehensive financial advice in person. They are usually expensive but worth considering when you’re in a tricky financial situation.

Get referrals

A financial advisor will likely play a crucial role in your life, so it’s important to hire someone you trust. If you have family members, friends, or colleagues who use the services of financial advisors, ask them about their experience and the advisors’ contact information. Additionally, you can perform an online search and read reviews to find a qualified and reliable advisor.

Verify the advisor’s credentials

Perhaps the best way to be sure you’re hiring the right person or firm to manage your money is to check their credentials. Highly-qualified financial planners and investment advisors usually have CFP (Certified Financial Planner) or PFS (Personal Financial Specialist) and CFA (Chartered Financial Analyst) certificates. Some advisors, such as CFP professionals, follow fiduciary standards, meaning they’re required to always act in the best interests of their clients. You can verify the background and experience of individual financial advisors and firms, including Robo-advisors on BrokerCheck, a free tool from FINRA (Financial Industry Regulatory Authority.)

Calculate how much you can afford to pay

The right financial advisor for you is the one you can afford and not the one you want. Fortunately, today there are great options for every budget. If you have a small budget, consider Robo-advisors, as they charge an annual fee that’s a small percentage (typically between 0.25% and 0.50%) of your account balance with them. Online advisors usually charge either a flat subscription fee, a percentage of your assets, or both and are more expensive than Robo-advisors. Traditional financial advisors are the most expensive, and they often charge a percentage of your asset management. Some traditional advisors may charge a flat fee, an hourly rate, or a retainer.