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A financial advisor can provide multiple types of financial advisory services to their clients. There is a wide range of areas within the realm of financial planning and advice. Not all financial advisors will be able to provide advice in every possible area. Many specialize in one or just a few areas.
As you save and invest to reach your financial goals, a good financial advisor can be a huge help in achieving them. Here are some tips to organize your search. Among the key issues: identifying the right type of advisor for your needs and learning the characteristics that make a good professional stand out from the rest.
J.P. Morgan Personal Advisors
J.P. Morgan Personal Advisors
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- Connect with a J.P. Morgan team member to schedule a free financial planning session. Call 833-930-4515 or fill out our contact form and we'll be in touch.
- Work with a team of fiduciary advisors who will create a personalized financial plan, match you to expert built portfolios and provide ongoing advice via video or phone.
- Partner with an advisor to build a personalized financial plan based on what's important to you—whether that's paying off debt, opening a business or saving for a big purchase.
- Get matched to expert-built portfolios, and receive ongoing advice and annual check-ins to ensure your plan is on track.
- Our team of advisors act as fiduciaries so you can be confident that any advisor you work with has your best interest at heart.
- Manage all of your banking, investing and borrowing, and conveniently transfer money online and on the Chase Mobile® app.
- Once we understand your financial picture, risk tolerance and time horizon, we’ll recommend a professionally designed investment portfolio that meets your needs and automatically rebalance as the market shifts.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Disclosures
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (“J.P. Morgan”), a registered broker dealer and investment adviser, member FINRA and SIPC. TIME Stamped is a publisher of J.P. Morgan, (“Publisher”). The Publisher will receive compensation from J.P. Morgan if you provide contact details to speak with a J.P. Morgan representative. Compensation paid to the Publisher will be up to $500 per completed contact form. Compensation provides an incentive for the Publisher to endorse J.P. Morgan and therefore information, opinions, or referrals are subject to bias. J.P. Morgan and the Publisher are not under common ownership or otherwise related entities, and each are responsible for their own obligations. Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.
1. Identify why you need a financial advisor
One of the most important steps in finding the right financial advisor is to identify the areas in which you need financial advice. These might include:
- Comprehensive financial planning.
- Retirement planning.
- Tax planning and advice.
- Estate planning.
- Insurance planning.
- Investment advice.
- Debt counseling.
- Advising for your business.
Your needs may overlap with one or more of these areas, or possibly others. They will also depend on the following factors:
- Your age and stage of life.
- Your level of wealth.
- Your level of financial knowledge.
2. Learn about the different types of financial advisors
Just as there is a range of financial advice available to clients, there are many different types of financial advisors to choose from. Many advisors offer several of these services as part of their practice.
Certified Financial Planner (CFP)
The CFP is perhaps the most respected professional designation among financial advisors. In order to earn the CFP designation, candidates must complete certain educational and work requirements. They must also pass a rigorous exam covering areas such as:
- Professional conduct and regulation.
- General principles of financial planning.
- Risk management and insurance planning.
- Investment planning.
- Tax planning.
- Retirement savings and income planning.
- Estate planning.
- Psychology of financial planning.
Investment advisor
An investment advisor may work in an independent practice or be affiliated with a larger firm. Investment advisors must generally be registered either with the Securities and Exchange Commission (SEC) or with state regulators. They will create an investment plan for you based on your individual financial goals and try to integrate your investment plan into your overall financial plan.
Investment advisors will devise an asset allocation strategy across your various accounts such as an IRA, a taxable investment account, and a 401(k) or similar workplace retirement account. Further, they will generally suggest the investments that should be chosen to implement their recommendations. In some cases, the advisor may execute the trades for you and even manage your portfolio. This will vary based on whether your relationship is one-time or ongoing.
Retirement planner
A retirement planner helps with financial planning for retirement. Their areas of expertise can include the best ways to save for retirement, helping clients determine how much they will need to have a comfortable retirement, retirement-income planning, and helping their clients determine when to claim Social Security benefits.
Wealth manager
A wealth manager is typically an advisor hired by higher net worth investors to help with their investments, tax planning, estate planning, and so on. Advisors who focus on wealth management typically provide all of the traditional types of financial advice but are geared toward helping their more affluent clients grow and preserve their wealth.
Tax advisor
Financial advisors generally incorporate tax planning into their advice. The suitability of investing and financial strategies often hinges on their tax implications. Services such as retirement income planning are closely tied to tax planning in terms of the tax impact of withdrawing funds from different types of accounts.
Many financial advisors also offer full tax services as part of their practice, including tax preparation. Others may work closely with an outside tax preparer. Regardless, financial advisors will generally look at your tax situation and make suggestions, ranging from changing your tax withholding to how small business owner clients should be structured from a tax perspective.
Estate planner
Many financial advisors help their clients with their estate planning needs as part of their financial planning services. Estate planning includes a variety of estate planning tools and strategies such as wills, beneficiary designations on retirement accounts and insurance products, trusts, and healthcare powers of attorney.
Many advisors have a relationship with an attorney whose practice focuses on estate planning to help with the implementation of strategies that require legal help.
Insurance advisor
Financial advisors can help you plan for your life insurance needs as part of the financial planning work they do for their clients. There are some advisors who sell insurance products and others who advise on the right type of insurance and then work with an agent to help you implement their recommendations.
Debt counselor
If you have debt issues such as student loans or excess credit card debt, a financial advisor can help you chart a course to pay this debt down and help you avoid this situation in the future.
Business financial advisor
Many financial advisors specialize in working with business owner clients. These advisors are generally well versed in the financial aspects of running a business and can be a source of advice in these matters. They can help you establish a small business retirement plan and craft an exit strategy from your business, as well.
Personal financial coach
Financial advisors act as their client’s financial coaches. However, there are advisors who engage in pure coaching and don’t provide specific investment advice. Financial coaches typically do not hold themselves out as financial advisors.
3. Look for trustworthy characteristics in an advisor
Are they a fiduciary?
A fiduciary advisor always acts in the best interest of their clients (rather than in their own interest) and only recommends financial products and strategies that are in the client’s best interest. Advisors who are registered with the SEC; members of the National Association of Personal Financial Advisors (NAPFA), the largest organization of fee-only advisors in the country; and CFP certificate holders are all required to adhere to a fiduciary standard. Other advisors may also adhere to this standard.
Besides the fiduciary standard, there are other, less rigorous standards. The suitability standard, for example, merely says that a recommendation must be suitable for the client based on their investment situation. (This means that an advisor could recommend a "suitable” investment that paid them a healthy commission, rather than an alternative that would be better for the client—maybe with lower management fees or higher earnings—but not as profitable to the advisor.)
Clients should ask an advisor if they are a fiduciary and ask them to put this in writing. If the advisor isn’t a fiduciary or won’t put it in writing, consider finding another advisor.
Check credentials
If an advisor claims a CFP or other credential, check it out with the organization. A number of professional financial planning organizations offer free databases where you can find a member financial advisor and check their credentials, including:
Additionally, the CFP Board lists all advisors who have attained the CFP designation.
And make sure the professional you’re considering has a good record. One of the best places to check whether there are any disciplinary actions or complaints registered against an advisor is on the FINRA BrokerCheck website.
Search for clarity
A financial advisor should be able to clearly explain their recommendations and suggested course of action to you. They should encourage your questions. If you find your advisor is pushing proprietary products from their firm or seems intentionally vague about the benefits of their recommendations, perhaps it is time to find a new one—or not sign up with that person.
Understand how the advisor is paid
There are a number of ways an advisor can be paid. The three main compensation models are:
- Commission-based. The advisor’s compensation is derived from commissions from the sale of financial and insurance products. They are incentivized to sell products in order to make a living.
- Fee-based. A combination of fees from a financial plan, investment advice, or other services combined with commissions from the sales of financial products to clients.
- Fee-only. The fees can come from taking a percentage of the client’s assets under management (AUM), hourly advice, a flat project fee for a financial plan, an ongoing retainer, or other method. The key is that all fees are paid by the client and none of the fees come from product sales.
Many experts suggest that a fee-only advisor is the best option for most people. More on this, below.
Find an advisor who keeps you on track
Beyond providing good advice, it's important that you work with a financial advisor who helps you stay on track. Not only does this type of advisor provide advice and suggestions to help improve your overall financial situation, but they also follow up to be sure you are implementing their suggestions. They answer your questions and make sure their advice is easy to implement .
4. Decide how much you can pay your financial advisor
The issue of financial advisor compensation has come to the forefront in recent years. Beyond the traditional method of charging a percentage of AUM, there are commission-based, fee-only, and fee-based advisors. It's important that you fully understand how any advisor you are considering will be paid.
Commission-only
While you don’t pay commission-only advisors out of your own pocket per se, you are paying for their services. And often you are paying dearly! These advisors are often registered reps working through a broker-dealer and also may be licensed insurance agents. They are compensated by investment or insurance companies based on the financial products they sell to you.
These advisors are typically governed by the less rigorous suitability standard, described earlier. There may also be conflicts of interest inherent in their advice because they are paid based on the financial products they are able to sell to you.
Fee-based advisors and fee-only advisors
Fee-based advisors work on some combination of commissions from the sale of financial or insurance products and fees from providing financial advice. In some cases, a fee-based advisor might do a financial plan for a fee and then use commissioned products to implement their recommendations. Another common fee-based scenario is when an advisor has legacy insurance clients, but now earns the bulk of their revenues from those clients through fees for financial advice.
As discussed above, fee-only advisors are more transparent. They earn their compensation only from fees paid by their clients.
Here are some typical rates charged by advisors for different types of services:
| Financial advisor/service type | Common rates |
|---|---|
Percentage of AUM | 1.0% is common; robo advisors may be in the range of 0.25% to 0.5% |
Hourly advice | $250 per hour |
One-time financial plan | $2,000 is common, although, in many cases, the fee will depend on the complexity of the client’s situation |
Retainer fee | $6,000 annually, though the level of the fee will depend on the complexity of the client’s situation and the services provided by the advisor |
5. Research top financial advisors
Most of the discussion above relates to individual advisors or firms. In many cases, these will be the top advisors for your needs.
There are also a number of larger organizations that you can consider. Understand that these larger organizations often have set rules, so if your needs are specialized they may not be the best fit for you.
| Financial advisor | Best for | Types of assets | Fees | Account Minimum |
|---|---|---|---|---|
Retirement planning and investment advice | Stocks, bonds, ETFs and others | From 0.20% to 0.50%, depending on the type and size of the account | None | |
Financial planning and investment advice | Managed portfolios and mutual funds | 0.40% to 0.60%, depending on the size of the account | $25,000 | |
Vanguard | Investment advice and financial planning | ETFs | 0.15% to 0.30% | $3,000 for digital advisor, which is Vanguard’s lowest level of service. Ranges up to $5 million for the highest service level |
Fidelity | Digital investing and professionally managed stock portfolios | Mutual funds and stock portfolios | No advisory fees for digital portfolios under $25,000; 0.35% for balances over $25,000, which includes unlimited one-on-one coaching calls; 0.40% or 0.70% for managed stock portfolios | $10 for digital investing services; $5,000 for managed stock portfolios |
Wealthfront | Online financial advisor | ETFs | 0.25% for automated investing accounts | $500 for automated investment accounts |
Time Stamp: The right financial advisor can help you achieve your financial goals
Finding a good financial advisor can enhance the likelihood of achieving your financial goals and provide you and your family with a bright financial future.
Unfortunately, financial planning, investing, planning for retirement, and the other areas that make up the financial planning universe can be quite complex. A good financial advisor will have experience working with clients in similar situations to yours and will also work with you to implement their suggestions to help you build that future.
Not all financial advisors are the same. They differ in terms of their methodology, how they are compensated, their areas of specialization, and in other ways. Be sure you do your homework in searching for a financial advisor who is right for you. Ask questions and look for thorough answers. And listen to your gut: If you don’t feel comfortable with that person and respected by them, keep searching.
Frequently asked questions (FAQs)
What’s the difference between a financial advisor and a robo-advisor?
A financial advisor is a human advisor who offers advice to their clients across a range of financial planning and investing functions. A robo-advisor provides investing advice based on algorithms they generate through their website and their systems. Some robo-advisors do offer access to human financial advisors as well.
What’s the difference between a financial advisor and an online broker?
A financial advisor is a person who provides their clients with financial advice in a variety of areas. An online broker is actually a platform offering access to different investments and types of accounts, such as taxable brokerage accounts, IRAs, and self-employed retirement accounts. Some online brokers might offer access to a financial advisor through their platform.
What can’t a financial advisor do for you?
While a financial advisor can offer a wide range of advice, they cannot make you follow it. You are not obligated to follow any advice given, but if you do find a financial advisor in whom you have confidence, you probably should consider following through on the advice they offer. Of course, ask questions first.
How can you find free financial advice?
A number of reputable banks and brokerage firms offer free online sources of financial information. In addition, check out the investor.gov website and advice from other governmental websites, such as the Consumer Financial Protection Bureau (CFPB).
Some employers offer free advice through their 401(k) plans. This might include information on the plan website or the ability to meet with an advisor in person or online. A growing list of employers are creating financial well-being programs for employees as well.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (“J.P. Morgan”), a registered broker dealer and investment adviser, member FINRA and SIPC. TIME Stamped is a publisher of J.P. Morgan, (“Publisher”). The Publisher will receive compensation from J.P. Morgan if you provide contact details to speak with a J.P. Morgan representative. Compensation paid to the Publisher will be up to $500 per completed contact form. Compensation provides an incentive for the Publisher to endorse J.P. Morgan and therefore information, opinions, or referrals are subject to bias. J.P. Morgan and the Publisher are not under common ownership or otherwise related entities, and each are responsible for their own obligations. Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.
The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.