Characteristics of a Good Financial Advisor (And How to Find One That Fits Your Life)

For many people, the idea of handing over their finances to someone else is scary. How do you know that person really cares about your well-being? How do you know they’re acting in your best interest? You need a professional you respect and trust to feel comfortable with them guiding your retirement plan.

That’s where most people turn to a fiduciary. Fiduciaries, also called financial advisors, are obligated to act in your best interest. They’re financial professionals who can help you plan, save, and invest in your future. Not every advisor is created equal, however. Each will have their own approach to managing finances and views on investing, so it’s key to find someone who shares your values and fiscal style. In this article we share the characteristics of a good financial advisor so you can choose the right partner for your money.

What should I look for when choosing a financial advisor?

Before looking for financial advisors, it’s important to evaluate yourself. Unless you know yourself, your needs, and your preferences, you won’t know whether an advisor is the right fit for you. Three questions you can ask yourself are:

• Are you a delegator or a DIYer? If finances seem intimidating, you might like an advisor who will take control for you. If you like doing things yourself, then an advisor who can teach you about wise investments will be more valuable. 

• Do they offer the products and services you need? Try to identify a few products or services you’re interested in, such as life insurance or mutual fund investments. Make sure the advisors you’re considering can offer those services before partnering with them.

• Do they fit the flow of your life? Think about how often you’d like to meet with your advisor. Some fiduciaries recommend seeing clients on a regular basis, while others limit necessary meetings to just the annual review. Check if the advisor’s proposed meeting frequency is a good fit for your life.

Once you’ve determined what you need, you can start looking for ideal characteristics in an advisor. Here are 3 characteristics of a good financial advisor:

Skilled Communicator

The world of finance is complex, so you need someone who can explain it in a way you understand. They should be able to teach you about different financial techniques, explain their plan for your finances, and answer any questions you have. There should never be confusion about what products or services you’re enrolled in.

Communication is a two-way street, so you should also feel comfortable speaking to your advisor. Find someone who shares your worldview and values so you can clearly express your concerns and questions without worrying if they understand your perspective. Clear communication is the key to effective financial planning.

Wise Counsel

Proverbs 12:15 tells us, “The way of a fool is right in his own eyes, but a wise man listens to advice.” 

A financial advisor is there to give you advice as an expert in the industry. With years of experience in the industry and skilled training, they’re qualified to recommend a course of action. They can help you navigate different situations and various stages of life wisely, so you always have what you need to provide for yourself and your family. You might have an idea of what you need and where you want to go, and your advisor is there to keep you on that path.

Customer Service

Financial advisors should practice servant leadership by making themselves easily accessible to their clients. This means when you call their office, a real person will pick up the phone. If your advisor isn’t available at that moment, they’ll call you back the same day to answer your questions and address your concerns. This level of personal service is what separates great financial advisors from the rest.

What makes a good financial advisor?

Every person will have a different ideal fit when it comes to choosing a financial advisor. There are, however, a few key personal and professional characteristics you can look for to see if the person will be a good advisor. 

Personal Characteristics

• Heart of a teacher. Your financial advisor should be willing and able to teach you about your finances at every meeting. They should make sure you understand what’s going on and give you as much or as little extra information as you need to feel comfortable with their decisions. Although they might be making the tough decisions for you, you should never be in the dark about how they’re managing your money.
• Trustworthy. Find someone who is honest, trustworthy, and dedicated to your success. You can speak to other clients or read testimonials to get an idea of how they work. You can also set up a meeting with them to get to know them and see if their personality is a fit for you. 

• Authentic. A financial advisor should always present their most authentic self to help you truly know them and their priorities. This might mean managing finances based on faith or being upfront about their views on investing and portfolio management. You should never feel like there’s something your advisor isn’t telling you.

Professional Qualifications

• Education. A bachelor’s degree is required to become a financial advisor, and some advisors will pursue master’s degrees in a specific field as well. Ask where they received their degree and if they specialized in an area of finance.

• Certification. Look for specific certifications such as Certified Financial Planner, Registered Investment Advisor, or Certified Kingdom Advisor. Some financial advisors might also hold tax licenses and certifications such as Certified Public Accountant. 

• Experience. You want to make sure your financial advisor can implement their knowledge in a variety of scenarios. Look for someone who has at least 10 years of experience and a significant client base. Make sure their clients are similar to you, so you know the advisor can effectively guide your decisions based on your situation.

Questions to ask when looking for a financial advisor

• What are your qualifications? 

1. 1. • Not every advisor will list all of their qualifications on their website. Ask things like where they went to school, what they studied, and if they have any professional certifications. This can help you get an idea of what financial strategies they’re passionate about or most skilled in.

• How will our relationship work?

1. 1. • You want someone who fits your lifestyle and will easily integrate into what you’re already doing. Ask about how frequently they like to meet with clients, if they prefer in-person or phone meetings, and how they like to discuss potential changes. 

• What’s your investment philosophy?

1. 1. • Every advisor has their own opinion about how to best approach managing finances. Ask how your advisor views investments and gauge that against your own beliefs and comfort level. For example, they might believe in aggressive investing but you’re more comfortable with a conservative approach. You want someone who’s philosophy matches your comfort level and goals.

• What benchmarks do you use to measure success?

1. 1. • Success looks different for everyone, and with the nature of the market, sometimes it can look like you’re taking a big loss. Ask your potential advisor how they measure portfolio success and what benchmarks they use to make investment decisions. This might be the S&P 500 performance, government bonds, the consumer price index, or any number of other indicators. 

• How do you get paid?

1. • Financial advisors should never be shy about telling you how they get paid. Most advisors operate on a fee basis, so you’re paying a predictable rate for their services. Be sure you know how an advisor is paid so you have the peace of mind they’re working with your best interest in heart and can anticipate charges to your accounts.

What is a reasonable fee to pay a financial advisor?

Ideally, you want to find a fiduciary who is a Registered Investment Advisor (RIA). These professionals operate on a fee-based cost structure, meaning they don’t earn commissions on the products you buy or services they offer. Instead, they collect a management fee—a small percentage of your account balances. The amount is typically anywhere between 0.5 – 2% and is debited straight from your accounts.

Most advisors can negotiate your fee rate based on how much money they manage for you. High net-worth individuals may be eligible for lower rates because their advisor is managing more accounts. 

Our goal here at Clear Money Path is to save our clients 10-20% versus our competitors by charging an affordable management fee. We can often save them even more.

Choosing a Financial Advisor

Finding the right financial partner for you can be difficult, but these guidelines should help you identify the characteristics of a good financial advisor. At Clear Money Path, we take a faith-based approach to finances that uses Biblical principles to guide decision making. If you’re interested in a financial advisor who shares your values, schedule a free consultation with us. We’d love to help you build your legacy.