Finding a Financial Advisor when You’re not Wealthy

If anyone needs a financial advisor, it’s the middle-class, yet they are often the most overlooked demographic today.

Many financial services companies set the bar high, requiring investors to have at least $500,000 to use their services. If they allow lower amounts, they charge much higher fees to make up for the lower commissions.

Fortunately, the middle-class have many options and it doesn’t require paying excessive management fees. Use the steps below to find an affordable and reputable financial advisor.

1. Know what you need

First, why do you need a financial advisor? Are you looking for investment advice, retirement help, or basic financial assistance? Knowing this helps narrow down your choices as not all advisors offer all services.

2. Know what you want to pay

Financial advisors cost money, obviously. Do you want to pay commissions when you buy/sell assets or do you want to pay a flat fee? Some advisors charge a percentage of assets under management, while others charge a flat dollar amount. Know what you can afford and/or want to pay.

3. Search online

The internet opens up a wealth of possibilities. Search for an advisor in your area and read his/her reviews. Narrow down your options based on what others think, but you’ll do your own legwork too.

4. Ask friends/family for referrals

If you are comfortable, ask your friends and family who they used. Many people happily share names and referrals. Some may even tell you who to stay away from if they had a bad experience. You’ll form your own opinion, but hearing from people in your life points you in the right direction.

5. Conduct an interview

Once you narrow your list down to 3 or so advisors, conduct an ‘interview’ to see what you think. A few questions to ask include:

  • What services do you offer? Do they align with your needs?
  • How much money do I need to work with you?
  • Do you charge a commission, flat fee, or a percentage of assets under management?
  • Are you a fiduciary?
  • How do you communicate with me and how often?

6. Ask for referrals

Use your gut instinct, but don’t be afraid to ask for referrals too. You’re trusting the financial advisor with your most prized possession – your net worth. If he/she doesn’t offer referrals easily, move on.

You don’t have to ask referrals any personal questions. Just get an idea of the advisor’s credibility, flexibility, and follow-through by talking to the referrals.

Don’t rush your decision when choosing a financial advisor. While you can likely switch at any time, it’s a lot of work and hassle. Find someone you are comfortable working with for many years to keep things simple and functional.

If you find you don’t like an advisor, by all means switch, but know your contractual obligations before signing any agreements so you don’t breach any contracts. This will only cost you more money and headaches than you had before.


Disclosure: This article is not to be taken as investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal, insurance, or financial professional. The observations made in external articles are independent of Wimple and should not be read as financial recommendations.

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