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7 Mistakes to Avoid When Hiring a Financial Advisor Find up to three advisors who serve your area, free! Take Retirement Quiz Choosing a financial advisor is a major decision that can determine your financial trajectory for years to come. But the wrong one could potentially wreak havoc on your investments and retirement.  The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.¹ Consider this example: a recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.² SmartAsset’s no-cost tool simplifies the time-consuming process of finding a financial advisor. A short questionnaire helps match you with up to 3 vetted fiduciary financial advisors, each legally bound to work in your best interest. The whole process takes just a few minutes, and in many cases you can be connected instantly to compare and decide on the best fit for you. Being aware of these seven common blunders when choosing an advisor can help you find peace of mind, and potentially avoid years of stress. 1. Hiring an Advisor Who Is Not a Fiduciary By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy. All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries. If your advisor is not a fiduciary and constantly pushes investment products on you, use this no-cost tool to find an advisor who has your best interest in mind. 2. Hiring the First Advisor You Meet While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you. 3. Choosing an Advisor with the Wrong Specialty Some financial advisors specialize in retirement planning, others are better for business owners or those with a high net worth, and some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses – before signing on the dotted line. 4. Picking an Advisor With an Incompatible Strategy Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style. 5. Not Asking About Credentials To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP. 6. Not Understanding How They are Paid Some advisors are “fee only” and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them. 7. Not Hiring a Vetted Advisor Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one. SmartAsset’s no-cost tool can help you avoid some of the common mistakes in looking for an advisor. A short questionnaire will match you with up to three vetted financial advisors serving your area, each legally bound to work in your best interest. Get your financial advisor matches today » Try SmartAsset's Financial Advisor Matching Tool Get retirement ready. Take this no-cost quiz to get matched with up to 3 vetted financial advisors serving your area. Get Started SPONSORED BY SMARTASSET Sources: 1. "Journal of Retirement Study Winter" (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study. 2. Vanguard (February 2019), Putting a Value on Your Value The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please see the methodologies employed in the Vanguard whitepaper. To receive a copy of the whitepaper, please contact compliance@smartasset.com.

 
 

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This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. SmartAsset.com is not intended to provide legal advice, tax advice, accounting advice or financial advice (Other than referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). SmartAsset is not a financial planner, broker or tax adviser. The Service is intended only to assist you in your understanding of financial organization and decision-making and is broad in scope. Your personal financial situation is unique, and any information and investing strategies obtained through SmartAsset.com may not be appropriate for your situation. Accordingly, before making any final decisions or implementing any financial strategy, you should consider obtaining additional information and advice from your accountant or other financial advisers who are fully aware of your individual circumstances. SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset's services are limited to referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any user's account by an Adviser or provide advice regarding specific investments. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
 
 
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