We all need financial guidance from time to time. But the type of advice you need can depend on your age. Baby boomers, for example, often need support with stretching their funds in retirement and creating spending plans.
If you’re part of this generation and looking for a financial advisor, your search should reflect your goals. This article will lead you through a process that will get you to the right match.
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The 5 Types of Financial Advisors
First, it’s worth reviewing how financial advisors earn money from their clients. There are a few different pricing models, and the one you choose could impact the kind of advice you get.
For instance, if an advisor earns a commission on every trade you make and then recommends an unusually large number of trades, that’s a red flag. You might not spot something like that if you ignore how your advisor makes their money.
With that in mind, there are five main types of advisors, based on Securities and Exchange Commission regulations.
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Fee-only: These advisors are paid based on the assets they manage for you. They may charge a percentage of those assets, an hourly rate or an annual fee.
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Commission-based: These advisors earn a commission based on the products they sell you but may not charge you much, if anything, directly.
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Fee-based: These advisors charge fees based on the assets they manage and may still earn a commission.
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Registered investment advisors: These firms generally charge an annual account fee or a percentage of assets invested.
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Robo-advisors: These automated online platforms offer low-cost investing advice and earn money through various account and trading fees.
You can find financial expertise across each of these pricing models. However, if you want your advisor’s incentives to align fully with your own, it’s a factor to consider.
Read More: I’m a Financial Advisor: 5 Things the Middle Class Wastes Money On
How To Choose a Financial Advisor as a Boomer
The baby boomer generation spans 18 years, from 1946 to 1964. That means the youngest boomers are nearing retirement, while the oldest may have already been retired for a decade.
Given this gap, it’s no surprise that even people within the boomer generation have substantially different financial needs. However, with the right process, you’ll end up with a great advisor regardless of your needs. Here’s how to get there.
1. Define Your Goals
Start by deciding what you hope to achieve through your work with a financial advisor. It might be:
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Preparing for retirement financially
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Paying off credit card debt and loans
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Making your retirement savings last longer
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Improving the performance of your investments
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Preparing for major expenses
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Adjusting to a new financial situation
Doing this can help you choose a well-matched financial advisor. It shows you what traits to look for when evaluating candidates. For example, if you want help preparing to retire within the next three years, you would choose an expert who specializes in that transition.
2. Consider Your Preferences
Next, consider how you’d prefer to work with your advisor and what resources you’d like from them. According to a recent survey, baby boomers generally care most about resources like:
You might also prefer to meet face to face with an advisor instead of online. Or maybe you prefer working with a respected company instead of an individual practitioner. These preferences can influence what you search for in an advisor.
3. Create a List of Potential Advisors
Now that you know what you want in an advisor, it’s time to begin looking for one. That process starts with a list of candidates. Yours could include local firms, solo practitioners, large corporations or all of the above.
The easiest way to start gathering your options is to search for them online. Type something like “financial advisors near me,” and you’ll likely find plenty of firms in your area.
Then, as you browse the results, some will naturally align more with your goals and preferences than others. These are the ones that should make your list for further investigation. For example, you might be able to cut your list in half just by eliminating online-only firms.
4. Read Online Reviews
About 89% of global consumers check online reviews before making purchasing decisions, according to Trustpilot. Consider doing the same before picking your next financial advisor.
Reviews from any single customer may be biased. But read through a few to see if any issues keep coming up. For example, one advisor may have a reputation for pushy sales tactics. That’s something you’d want to know before moving forward.
5. Schedule Consultations
Now, you’re ready to start scheduling consultations with the remaining options on your list. At this point, you’ll likely have eliminated some candidates based on the factors covered previously.
Consultations, whether in person or online, are an opportunity to see whom you connect with. You may be communicating with your new financial advisor quite a bit. It’s important to choose someone who makes that easy to do.
These meetings also give you the chance to ask personalized questions about strategies, fees and other concerns. For instance, you might want to know how each advisor would handle a particular portfolio or asset.
6. Double-Check Their Credentials Before Finalizing
Once you go through your consultations, a few candidates will likely emerge as the final choices you’re deciding between. At that point, circle back and check their financial advisor credentials.
You want to work with a team of professionals who truly possess the expertise you’ve been searching for. Credentials help prove that — either negatively or positively.
The easiest way to verify a financial advisor’s credentials is by visiting the Financial Industry Regulatory Authority’s website. The nonprofit organization offers a BrokerCheck service, which shows financial advisor certifications, licenses, employment history and even previous violations.
It’s a simple check you should always complete before trusting someone with your money. Otherwise, you could end up wasting all of the effort you put into finding an ideal advisor.
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This article originally appeared on GOBankingRates.com: Boomers: Here Are 5 Types of Financial Advisors — and How To Choose the Right One for You
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