Factors to Consider When Choosing a Financial Advisor

Who is a Financial Advisor?

financial advisorA financial advisor is a trained professional with knowledge on how you can make better financial decisions. They provide advice on a variety of financial matters and offer their services to customers of financial institutions. A qualified FA will hold the necessary documentation and license to prove they are qualified and fully trained in this field.

Many people seek out financial advisors for services such as management of their investments. If you have a diverse investment portfolio and don’t have time to manage it yourself, seek the services of a financial advisor. Others sell insurance products, plan estates, and help with tax planning and remittance.

A qualified financial advisor must be fully trained in all matters finance and have the official Series 65 license. The license gives them the go-ahead to engage customers. Other licenses are required depending on the service they are providing to the customers.

The term ‘Financial Advisor’ is broad cutting across many categories of finance and not defining one area only. There are several professionals referred by this term and you might note this on their business cards. They include insurance sales agents, stockbrokers, tax planners, bankers, and estate planners.

Licenses Required by a Financial Advisor

All financial advisors who are selling investment products to customers out in public must be holders of certain licenses:

i. The Series 63 License

Any advisor working within a specific state needs this license to operate within its jurisdiction. The license is awarded after taking a short and easy exam which you must pass. The main content of this exam is on Rules and Regulations and lasts for only 75 minutes.

ii. The Series 65 License

Any financial advisor working in a state and is paid on fees needs this type of license to operate. Disregard it if you are compensated by commission. You should pass an exam on Rules and Regulations that govern fee paid advisors. These are not the same as for those who are paid on commission. Some advisors that are holders of CFA/CFP can have this exam waived by FINRA and awarded a license.

iii. The Series 6

FINRA (Financial Industry Regulatory Authority) issues the Series 6 license to financial advisors. With this license, you can only sell grouped securities such as mutual funds. You are not allowed to sell individual products such as stocks. As a new advisor, start by getting the series 6 then proceed to the next license.

iv. The Series 7

This is the most important license a financial advisor holds and it’s issued by FINRA. With it, you have no limit on the type of financial product you can sell to customers. The only product left out is commodities that you are not permitted to sell with the license. It’s quite a challenge to obtain the license.

Factors to Consider When Choosing a Financial Advisor

The work of a financial advisor is crucial to your financial well-being. It’s important to choose the right one depending on what assistance you require from them. Imagine dealing with an unlicensed doctor and seeking advice from them on an illness, it can be catastrophic.

1. Unique Approach

Anything involving your financial health is important and needs utmost care from your advisors. In a bid to sell many products, some advisors group products together and try to convince their clients on a one-size-fits-all solution. This is the wrong move and you should run from such an advisor. It’s like a doctor offering the same medicine for all diseases.

The best advisors know how crucial it is to offer unique packages for each client. They take time to listen to your needs and together you pick out the solutions that benefit you. After they have sold you the products that won’t be the last time you see them. They help you keep an eye on the progress of each product and offer advice on improvements to make with time. This way you attain your financial goals faster.

2. Licenses

When dealing with a financial advisor that is selling you different products, request to see their licenses. They must be qualified and authorized to sell you these products. All the important licenses are listed above and must be issued by FINRA. Without proper licensing, you are most likely dealing with an advisor who won’t help you reach your financial goals. Be careful when dealing with them.

3. In-depth Research

Before you even approach a financial advisor, know what you want and what to expect. This is one of the most critical parts of dealing with an advisor. You must have a clue of what you need from them and the products you are interested in. What kind of an advisor are you looking for? Are you in need of Estate Planning, Insurance, Investment, or Tax planning? All these professionals are referred to as financial advisors but deal with different financial matters.

4. Questions are Crucial

Be prepared to ask the financial advisor important questions. This shows that you have done your research and know what to expect. Inquire on the type of financial advice they provide. Which products do they sell and are they licensed to do so? Which financial service provider do they operate from and is it reputable in the industry? Make sure you know of all the reputable financial service providers as part of your research. What plan can they draw up for you to help you attain your set goals?

5. Fees Charged

Not all financial advisors work on commission, some charge certain fees for their services. A good advisor helps you understand all the applicable fees first-hand and doesn’t withhold the information. Some advisors make it a habit to not disclose all fees charged to a client and you only realize it later.

To create trust between you, get an advisor that is forthcoming with all the relevant information including total fees charged. In case you find the fees too high, know this will affect your investment portfolio output. Some negotiate and waive some fees for their clients.

6. Reliability

Just like in choosing a brokerage firm, getting a reliable financial advisor is important for your financial plan. You must be able to trust and rely on what they tell you if you are to work together on your goals. Ample research once again plays an important role to get a reliable financial advisor. It’s best to shop around and consult two or three before you settle on one of them. Trust is an essential part of this since you are seeking a lasting relationship with them. Investing is long-term and not a one-time transaction.

7. Resources

A good financial advisor is backed by a credible firm that has ample resources under its belt. The firm needs to provide you with access to essential financial products, and great ideas and resources in investing. The more access they have the more positioned they are to help you attain your financial goals. As much as a financial advisor says all the right things, they should deliver as well.

The main goal is to make the best investment decisions and see your money multiply. This requires sound knowledge and access to resources that make it happen. Some firms have more than financial advisors in their workforce. They can have experts in various fields to assist you where need be. You might be focused on investing in technology and need a better understanding of this industry. You can request your advisor to connect you with their in-house technology expert for a consultation.

Are Financial Advisors Worth it?

You might be wondering if there is any need to seek out the services of a financial advisor. In case you are an expert investor, chances are you know much more and see no need in getting one. If you are just starting, it wise to get some help. There are a lot of different concepts involved in investing that you should master. A reliable and integral financial advisor will hold your hand as you navigate it all.

They are in a better position to help analyze your financial plan and build a big picture for you. Remember investing is mostly long term and you can’t think of rewards that come in tomorrow. Maybe your plan is for a good retirement package. It’s best to seek out a financial advisor with experience in these types of plans to guide you. What are the best investments to make for such a plan? Where can you start?

Mostly we create financial plans to help with major financial events in the future. Once you have a newborn baby in your young family, you start thinking of college immediately. Creating a college fund is important but you can opt to invest this money. Which are the best securities to purchase?


A financial advisor is crucial in your financial well-being. It’s wise to get in touch with one to help you as you set out on your financial journey. There are a lot of concepts to learn in this diverse field. Investing is rewarding but you must know what you are doing.