You want your best interests to be the driving force behind all your advisor’s decisions. Independent advisors have a fiduciary duty to put their clients first while brokers’ primary allegiance is to their company. Also, how advisors are compensated is paramount in determining whether your interests come first or whether they are incentivized to profit in ways that could be detrimental to your investment goals. “Fee-only” advisors receive compensation directly from their clients based upon a percentage of assets managed or a fixed or hourly fee. This form of compensation allows the advisor to be objective and independent in their recommendations to clients. Compensation from other sources, such as transaction fees or the sale of proprietary products, can lead to potential conflicts of interest. Review the firm’s online filing with the SEC (called a Form ADV) to ensure your interests are aligned.
Your needs don’t fit neatly into a box.
How to Choose a Financial Advisor
The decision to work with a financial advisor is a positive step toward realizing your financial and life goals. Major life events such as retirement, marriage or divorce can feel overwhelming but they don’t have to be.
The right advisor can help guide you through life’s ups and downs and help protect and grow your nest egg to bring you closer to financial freedom.
However, choosing the “right” advisor can be a daunting task if you don’t know what to look for. The following are key areas to focus on when making your decision: