Originally published on medium 

How would you like to look up many years from now with a robust investment portfolio? Or find ways to get profitable short-term returns on your investment? If these are financial goals of yours, chances are, you might be looking to get the best advice for your financial future long-term, or to take advantage of the irresistible opportunities available to build and increase your wealth right now.

When it comes to hiring a financial advisor, you might be wondering if making such a decision is even necessary, or if it would be the most cost-effective path to take in the long run. As of right now, there are currently over 200,000 financial advisors in the U.S alone. This is according to the most recent analysis by the Bureau of Labor Statistics. And according to these findings, these numbers are expected to increase as the demand for financial advisors is growing faster than the average job growth rate. 

Also, by the time you’re reading this article, you’ve most likely already come across other articles and resources that make quite the compelling argument for, or against hiring a financial expert to help you manage your finances.

Along with all of the varying commentaries, thoughts, and opinions out there on the web, if you’re new to the world of personal finance and wealth management, there’s no doubt that there’s just about enough opinions out there to keep you on the fence for longer than you’d like — if only you could just decide which side of the fence to pick.

But first things first, before deciding whether you need to schedule that appointment with an advisor or not, it is also important to know exactly what a financial advisor actually is.

What is a Financial Advisor?

A financial advisor is essentially a financial services professional who helps clients make the best decisions with their money and financial goals. This is someone who can also make informed decisions on behalf of their clients in regards to their financial wellness and growth.

With all of the many tasks provided by these financial experts, there are also ongoing questions about whether there is a difference between a financial advisor, a financial planner, or a wealth manager. This is typical because sometimes these terms are used interchangeably. 

Therefore, the best way to easily determine which professional to work with would be to primarily focus on exactly what service you need that any of these professionals can provide. Other things to consider could include how compatible you both are with your personalities, how much you perceive that they do have your best interest in mind, etc.

With all this in mind, here are three key factors you might want to consider to finally make the decision that’s right for you.

1. Your Current Financial State 

As you decide on hiring a financial expert, one essential factor to consider is where you are right now with your finances. Are you just getting started with your investments? Is the idea of opening an investment portfolio still very new to you? If so, it would be in your best interest to find advisors who also specialize in working with newer investors, as not all financial advisors (as in the case of some large brokerage firms) will do so, unfortunately. 

It’s important to pay close attention to who and how they market their services in order to determine if you fall into that category. A sure way to find out would be to schedule a consultation if available, look for reputable business reviews online, or to check out their websites for any frequently asked questions or any additional information about the types of clients they offer their services to. 

If you look around enough, you’ll be sure to find advisors who also market their services to potential clients who may be beginner investors with not as much knowledge or the big bucks to spend when compared with other wealthier prospects who might have more money to work with. These professionals should be able to help you set up the right type of investment account that would be more fitting for where you are currently and for where you’re headed on your financial journey.

2. Time Available to Manage Your Finances

For many people, as much as they hate to admit, they really do not have enough time to learn everything there is to know about making the right investments — even with a plethora of access to knowledge of the fundamentals of personal finance on the internet. And as much as it is possible to set some time aside to learn, as others might argue, it is still a reality that for some, they could use all the help that they can get in order to become a successful investor. 

This is where learning from an expert could play an important role in helping you fill in those knowledge gaps and to help speed up your learning process. Plus, it wouldn’t hurt to also have someone other than yourself, with whom you can hold yourself accountable to stay on track as well.

3. The type of Financial Advisor

Financial advisors are also categorized by their fee structure and how they are compensated for their services. This is a crucial aspect to keep in mind when picking your expert of choice. Basically, you’ll have to determine whether your advisor offers their expert recommendations with your best interest in mind, or are just trying to sell a certain product to you in order to meet their own sales quotas. To be on the safe side on what type of advisor to hire, make sure your advisor has a fiduciary responsibility — whereby they are bound by legal duty to act in your best interest. 

As a plus, it also helps if this is someone you feel comfortable working with on a person-to-person basis. This might require a bit more patience and research on your end to find someone whose personality or temperament is one that you’re the most compatible with. So this means it’s best to not simply hire the first person you speak with. Your financial journey is not something to be toyed with, and is a significant step you are taking for a better quality of life.

Generally, these are the three main types of financial advisors classified by how they are compensated:

•    Fee-only Advisors – (Often seen as the less conflict-of-interest option available. They are compensated by a set rate they offer to their clients.)

•    Commission-based Advisors – (They are paid solely through earned commissions from the sale of financial products and services by their clients.)

•    Fee-based Advisors – (Typically a hybrid of the fee-only and the commission-based payment structures. They receive compensation from their clients in addition to commissions from financial products purchased by the client.)

Final Thoughts

Overall, hiring a financial advisor is a great idea if you are just getting started or are already far along on your journey to financial wellness with the desire to be a successful investor for the long haul. The financial advisor of choice should be someone who will always act in your best interest, based on fiduciary duty (especially in the case of investment advisors), which is the highest standard of care under federal law for advisors. 

Also, they need to be someone you enjoy working with. This should be a person who is in essence, more of a financial guide, teacher, and advocate. Financial advisors empower you with the knowledge to make informed decisions but they do not make the ultimate decision for you. Because when it comes to your financial future — with the right information and guidance from the right experts, the person responsible for being in the driver seat should be none other than…(you guessed it) you!

So, have you ever considered hiring a financial advisor?

(Disclaimer: This post is intended for informational purposes only and does not substitute for professional investment advice. Please be advised to always contact a registered financial expert before acting on any advice given here or in any other outlet of information on the web.)