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MARCH 03, 2023

A guide to choosing a financial advisor

A Guide to choosing a financial advisor

Selecting the right financial advisor for your specific situation and goals may feel like a daunting task at first, especially if you’re unfamiliar with the benefits that come from working with one. In this guide, you’ll gain an understanding of how financial advisors differ from other financial professionals, how to prepare to work with one, how to gain the most out of the relationship, and more.

What is a financial advisor?

If you’ve never worked with a financial advisor, or if you are looking to establish a new relationship with one, you may have questions. A financial advisor is a trusted financial professional, and an expert in understanding and implementing all your financial needs. Your family will benefit from building a long-term relationship with your advisor, so you can trust and rely upon them for insightful, proven, relevant, and valuable financial advice through life’s major stages.

Financial advisors work alongside you to understand your personal wealth and lifestyle goals, as well as your investment needs related to risk tolerance and time horizon. They also help with wealth planning, business succession, family office, philanthropy, and estate planning needs. A good first step is for the advisor to gather all your pertinent information so that your unique needs can be assessed. From there, they work in partnership with your other advisors, such as tax and legal, to develop and implement strategies that align with your goals. The best financial advisors look at your financial situation holistically. Think of them as an expert resource that simplifies financial complexity.

“Money can be an emotional topic,” recognizes Carol Schleif, deputy investment officer at BMO Family Office. “Having an objective sounding board who is in your corner can help you stay focused on what matters most. It can also help you to avoid costly mistakes. Financial advisors have a multitude of resources behind them to lend expertise, insight, and due diligence that would be virtually impossible for an individual to amass on their own.”

There are many kinds of advisors we rely on to help achieve goals and manage wealth. Here are some differences among them:

Financial advisor vs. financial planner

Financial planners and financial advisors work together to achieve optimal results for you. A financial planner makes recommendations for your overall wealth plan and the different scenarios that are important to you, but a planner has a more holistic toolkit to achieve the wealth plan — lending solutions for estate and will planning, business succession and transition planning, tax planning, philanthropy guidance, investment solutions, and more. Financial advisors also need to be planners; however, they take it a step further by ensuring successful execution on the plan.

Financial advisor vs. accountant

Your financial advisor often works in partnership with your accountant, as a strong team of experts working on your behalf. With expertise specifically in tax planning, your accountant’s skills are complementary to the skills of financial advisors, who manage and implement broader wealth strategies. This synergy helps ensure you are making the most of your wealth for retirement, legacy, and community causes. If you’re a business owner, the partnership between your financial advisor and accountant is vital, given the nuances of entrepreneurship, succession, and transition planning.

Wealth manager vs. financial advisor

A wealth manager is an investment specialist who oversees the development of an investment portfolio in order to meet client investment objectives and time horizon. They ensure the client's capital is put to the best use to achieve solid returns that align with the risk you are comfortable taking. Throughout this process, the client’s objectives are at the center of the strategy. A financial advisor is often a wealth manager as well, however financial advisors look beyond the investment portfolio to the other elements that are critical to your wealth management journey.

Women investors benefit from a financial advisor

Women often value different approaches to planning and investment philosophy from their male counterparts. Although both men and women benefit from having a strong relationship with a trusted financial advisor, their realities can be different.

Women now choose their own life paths to a much greater extent than in previous decades. Some marry, some are single, some are mothers and grandmothers, and some divorce. Some aspire to leave a wealth legacy for their family, while others want to ensure philanthropy plays a key role in their legacy. And, as women are now more educated than ever before and therefore have an even higher earning potential than men, all of these elements create opportunity and bring more complexity in identifying the many different wealth management paths that are available to them. As a result, they benefit from working with a financial advisor who helps them weigh their options and create clarity.

Most importantly, for many women, a financial advisor can save time. According to The Motley Fool, 97 percent of Americans who want to be financially prepared for the future aren’t making sufficient time to manage their finances. In particular, working mothers have less time for investment research and planning, so they can benefit greatly from the trusted guidance of a financial advisor.

How to prepare for working with a financial advisor

When it comes to choosing a financial advisor, it can be helpful to reach out to your trusted network of family, friends, and colleagues to gain an understanding of their experiences. When you identify a financial advisor you want to work with, schedule your first meeting and consider which aspects you’d like to discuss, and if possible, bring along any relevant financial documents. Many financial advisors will offer advice on how you can prepare for your first meeting in advance by providing you with a list of items to bring and a few pre-meeting questions that you can start to think over.

Additionally, “You should have an idea about your goals, your tolerance for financial risk taking, and your short- and long-term life plans,” says Amy Hale, managing director of BMO Wealth Management in Florida and Atlanta. “What do you want to accomplish for yourself or others, both right now and in the future? What would you like to give, or what type of legacy would you like to leave to your children or community? You should plan to engage in a series of conversations with your financial advisor to sort this out,” she elaborates. If you are not entirely sure of your goals, be open with your advisor so that they can help guide you.

Are financial advisors worth It?

When determining whether the costs associated with engaging a financial advisor are worth it, it’s important to clarify your own needs first. Most Americans are not investment specialists; they may excel in their own professions and be experts in their fields, but they generally do not have a strong financial acumen or a deep understanding of wealth management rules, laws, and tax treatment.

Financial advice is accretive to one’s investment results, as financial advisors spend years gaining acumen and education toward their wealth management expertise. As a result, you’re paying for expert advice in an area you’re less familiar with, which drives better decisions and financial outcomes for you — all while saving you time. “There is no one size fits all,” explains Hale. “It’s important to have a transparent relationship, especially when it comes to fees, but with the right financial advisor, the fees are very much worth it.”

When working with a trusted and successful advisor, the results after fees should always be well-justified by the long-term achievement of financial objectives. Although the financial industry has become competitive, it’s prudent to conduct sufficient research on fees before entering into a long-term relationship with a financial advisor. The services should be well-explained and understood, and anchored in a strong commitment to transparency and communication.

How to find a financial advisor

Choosing the best-fit financial advisor for yourself and your family is one of the most important financial decisions you will make, but there are plenty of routes for you to take in finding one that’s a great match. This will have a meaningful impact not only on your portfolio returns, but more importantly, on your peace of mind when it comes to important financial decisions.

Along with speaking to your contacts about who they recommend, you can research advisors in your community who produce thought leading articles and information that resonate with you. If you’re still unsure of how to find a financial advisor, you can also use your computer’s search engine to your advantage by simply typing in “financial advisor near me.” Once you’ve sourced a few options, you can contact the local leaders at those firms, and ask to meet with potential advisors. If you don’t think a particular financial advisor is the right fit for you, meet with a few others in your area so that you can fully assess personality fit and find someone who you are comfortable with. Once you find a match, they can walk you through your next steps. During this process, you should be as transparent as you can with your financial advisor on your goals, and share how you’d like to stay informed so they are aware of your preferences.

Changing your financial advisor

If you’re unhappy with your financial advisor, it may be time for a change. The best financial advisor should be viewed as an asset to your trusted advisor circle, along with your accountant and lawyer. If you’re unsatisfied for any reason, allow for an honest conversation with your financial advisor to identify the underlying causes of dissatisfaction. The problem could relate to their communication or investment style, or maybe you have unfulfilled expectations.

An open conversation can help solve the problems you’re facing before you resort to changing your advisor. However, if the relationship really isn’t a good match, seeking a new financial advisor may be your best course of action. Although this change should not be taken lightly, if the issues cannot be addressed and resolved with agreeable compromise, then changing your financial advisor should not be delayed.

People work hard for their savings and investment capital, so it’s imperative that you feel you are getting value from the relationship with your financial advisor. As Schleif reflects, “Many women change advisors after their husbands are gone. Since the relationship was with the husband, the advisor may not be right for the needs of the wife. At the end of the day, you must be completely comfortable with the person you’re working with, as you’ll be sharing intimate details of your financial picture.”

Questions to ask a financial advisor

Before you begin working with a financial advisor, ask yourself: What is your relationship with money? Once you have a basic understanding of this, and you can articulate it, then it’s time to find a financial advisor who respects your feelings and incorporates them into the relationship and the advice they give.

Before you meet, it can be helpful to write down questions to ask a financial advisor so that you can ensure you’re on the same page. For example, many women have anxiety about not having enough money, no matter how successful they are in their career. In this case, they should look for a financial advisor who understands this perspective and aims to address it. This could manifest in the advisor communicating portfolio results in a timely manner, demonstrating proactiveness when markets are doing well, and providing downside risk protection when the market is volatile. Your advisor is there to simplify financial complexity and help guide you, so be candid about your goals for the relationship and where you think you could benefit from additional direction. While you can go to your financial advisor whenever it’s needed, an annual review of your wealth plan achievement is an excellent opportunity to review performance, as well as to ask questions and share important information that may result in different decisions.

Women can truly benefit from working with a financial advisor. By working your way through these steps, you can identify the best-fit advisor for you and build a strong relationship with a trusted expert who can provide you with guidance and peace of mind.

For more information, speak with your BMO financial professional.



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Article 3: Creating a contingency plan to protect your business

Article 4: What COVID-19 has revealed about women’s perspectives on giving

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