How To Choose A Financial Advisor in 2025 – Forbes Advisor

A great financial advisor does more than just manage your investments—they help you to use money as a tool to achieve your dreams. 

Some financial advisors might charge a hefty fee, treat you to lunch and ask for referrals while still managing your investments responsibly. A bad one may dazzle you with charm and promise incredible returns, only for your money to vanish. So, how do you choose a financial advisor?

Related: Find A Financial Advisor In 3 Minutes.

Step 1: Realize You Need Help

Financial advisors help clients with varying levels of money knowledge, from beginners to seasoned veterans.

Perhaps you want to start a family, buy a business, change careers or even just make sure you can retire one day. Regardless of why you need help, there will be a financial advisor who specializes in your situation and can help guide you through it, and often for less money than you think. 

Financial advisors offer a range of different types of advice. Here’s how they can help you.

Investment advice: Financial advisors research different investment options and make sure your investment portfolio stays within your desired level of risk while meeting your financial goals.

Personal finance: Financial advisors can help you craft budgets, spending plans and set up short and long-term financial goals. Part of their role is to keep you on track, with regular check-ins as well as offering you objective advice. 

Tax strategy and planning: Tax planning involves strategizing ways to decrease the amount of taxes you may pay. Remember that not all financial planners are tax experts and that tax planning differs from tax preparation. 

Retirement planning: Financial advisors can help you build funds for the ultimate long-term goal: retirement. Then, once you’re retired or nearing retirement, they can help ensure you’re able to keep your money safe.

Estate planning: For those who wish to leave a legacy, financial advisors can assist in figuring out a strategy to transfer your wealth to the next generation, whether that’s family, friends or charitable causes.

Step 2: Learn The Lingo

Ask any prospective financial advisor if they would act as your fiduciary. In most situations, you want to enlist a financial advisor who is bound by the fiduciary standard.

What is a fiduciary?

A fiduciary is someone entrusted to manage assets or wealth who is bound to serve in your best interests at all times. Fiduciary advisors must disclose to you any conflicts they may have when managing your account and how they are compensated.

What is a fiduciary duty?

Fiduciary duty is the legal obligation of a fiduciary to act in the best interest of their client. This includes the duty of loyalty and the duty of care. When an advisor has a fiduciary duty, they must put your financial interests first, above their own potential compensation.

Some, but not all, financial advisors are bound by the fiduciary standard, meaning that they are ethically required to work in your financial best interest. 

Not all advisors have to abide by this code. For example, broker advisors are held to a “suitability” standard, meaning they must only suggest products that are suitable to a client’s needs. But that doesn’t necessarily mean the suggestions are the best available options.

The rule “requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This is based on the information obtained through reasonable diligence of the firm or associated person to ascertain the customer’s investment profile,” according to the Financial Industry Regulatory Authority, an organization that regulates brokerage and exchange markets. 

Certified financial planner

CFP stands for certified financial planner, a professional certification that requires education, examination, experience and ethical requirements. In general, CFPs have proven expertise in many facets of financial planning, such as investments, taxes, insurance, estate planning and retirement. CFPs are also bound by the fiduciary standard, according to the CFP Board, a professional organization that administers the CFP certification and sets the standard for the profession. 

Registered investment advisor

Registered investment advisors, or RIAs, can be either individuals or firms that provide financial services. As fiduciaries, they are legally obligated to act in their clients’ best interests. 

Investment advisors managing $110 million or more in client assets are regulated by the Securities and Exchange Commission, whereas those handling up to $100 million fall under the authority of state securities regulators.

The SEC maintains a comprehensive online database, including a directory of investment advisors by the individual’s name. But we’ll get to that shortly.

Related: Find A Financial Advisor In 3 minutes.

Step 3: Decide What Financial Advisory Services You Need

There are plenty of ways to get financial advice these days. The right option for you depends on what you’re looking for, the kind of help you need and how much you want to spend. 

Determining what to do with your money—and the type of service you need—will probably shape the kind of financial advisor you go with.

First and foremost, you’ll need to decide if you want a traditional, human financial advisor or a robo-advisor. 

Traditional financial advisors

Commission-only advisors

Some financial advisors make money by earning sales commissions from third parties. Others may charge fees, meaning they derive only part of their income from third-party commissions.

Either way, financial advisors who earn third-party sales commissions derive some or all of their income from selling you certain financial products or services.

Best for:

• A specific financial product, like insurance policies or certain investment products
• Prefer not to pay upfront fees for financial advice

Reasons to consider alternatives:

• They may not recommend the best option for your needs
• Potential conflicts of interest

Fee-Based Financial Advisors

Fee-based financial advisors earn money through a combination of fees and commissions. They generally will charge a percentage for the assets under management (AUM). 

Best for:

• Reduced conflict of interest
• Comprehensive financial planning

Reasons to consider alternatives:

• Cheaper investment management
• Don’t meet the asset minimum

Advice-Only Financial Advisors

Advice-only financial advisors provide financial planning services without managing your investments or selling products.

Best for:

• Looking to build an investment plan
• Wanting a second opinion on an investment portfolio 

Reasons to consider alternatives:

• Ongoing investment monitoring and management
• Hands-off approach to your financial planning and investments

Robo-Advisors

Robo-advisors offer low-cost, automated investment advice. Most specialize in helping people invest for mid- to long-term goals through preconstructed, diversified portfolios of funds.

Some robo-advisors include access to human advisors. But the portfolio is still managed by an automated set of parameters. 

Best for:

• Low-cost, automated investment management
• Simple financial situation 

Reasons to consider alternatives: 

• Making complex investment decisions
• Lacks personalized attention

Related: See Our List of Best Robo-Advisors.

Step 4: Decide How Much You Can Pay Your Financial Advisor

Make sure you understand the fee your advisor charges.

Commission-only financial advisors may seem free on paper, but they may receive a portion of what you invest or purchase as a payment. 

Fee-based financial advisors may charge fees based on the total amount of assets they manage for you, or they may charge by the hour, by the plan, through a retainer agreement, or via a subscription model, to name a few examples.

Average financial advisor fee rates are listed in the table below. This data comes from Envestnet’s MoneyGuide 2024 State of Financial Planning and Fees Study.

Robo-advisors generally charge less than their human counterparts. It’s not unheard of to pay an AUM fee of 0.24% with an automated investor program.

Step 5: Find a Financial Advisor

There are a few good ways to find a financial advisor. Ask friends, family, and peers for recommendations when trying to find a financial advisor near you. Keep in mind that unless they are financial experts themselves, their recommendations may be more about an advisor’s charisma than their credentials and ethics. 

Alternatively, you can look for financial advisors online. Many professional financial planning associations provide databases of financial advisors:

Step 6: Check a Financial Advisor’s Background

When evaluating financial advisors, consider their credentials and research their backgrounds and fee structures. 

You can view disciplinary actions and complaints filed against financial advisors using FINRA’s BrokerCheck. Remember, just because someone is part of a financial planning association, that doesn’t mean they’re a fiduciary financial advisor.

Check if the financial advisor is a fiduciary.

1. Use the BrokerCheck to verify their investment advisor (IA) status.
2. Check if they earn any commissions that could create conflicts of interest.

How to check a financial advisor’s background online

It’s a good idea to look up a potential financial advisor using FINRA’s BrokerCheck service. On the site, you can check for any disciplinary actions, customer complaints or regulatory issues.

You can also verify their employment history, licenses and registrations. The SEC’s Investment Adviser Public Disclosure database is another valuable resource for researching advisor credentials and any potential red flags.

Step 7: Hiring a Financial Advisor

Once you’ve picked out a financial advisor, it’s time to hire them.

Each financial advisor and firm operates differently. But your experience hiring a financial advisor will most likely include these steps:

1. Contact the advisor or firm you’d like to work with. Many firms have a calendar link on their website to schedule an initial consultation call.
2. Gather some basic information before your consultation call. If you have a partner, sit down with them to determine your short-term and long-term financial goals. 
3. During the consultation, your advisor will ask you some basic questions. A great advisor will focus on more than just numbers.
4. After (and sometimes before), your financial advisor will send you a form about your financial picture to complete.

Once you decide to hire a financial advisor or advisory firm, you’ll probably receive legal documents to sign. These usually outline the scope of their practice, fee schedule, and rights and responsibilities.

From there, you’ll have follow-up conversations with your financial advisor. 

Questions To Ask a Potential Financial Advisor

When meeting a financial advisor for the first time, it’s important to obtain the answers to these questions and ensure you’re satisfied with their responses:

1. Are you a fiduciary, committed to acting in my best interest?
2. How do you make money?
3. Do you always act as a fiduciary, even when selling commission-based products?
4. What is your approach to financial planning? 
5. What financial planning services do you offer?
6. What kind of clients do you typically work with?
7. Do you have any account minimums?
8. Do you have any conflicts of interest in managing money? 
9. What information do you need me to provide to develop my financial plan? 
10. How many times and how often will we meet?
11. Will you collaborate with my other advisors, such as certified public accountants (CPAs) or attorneys? 

Related: Find A Financial Advisor In 3 minutes