How to find a financial advisor (human or otherwise)

by John Schneider
How to find a financial advisor (human or otherwise)

Since 2001, advisory services within the financial services industry have exploded. This trend escalated during the housing crash and subsequent recession of 2008. The increase in advisory services is good because people who use financial advisors tend to do better with investing than those who don’t. A Morningstar study showed individuals with a financial planner have nearly 29% more in retirement income wealth than those without one.

That said all, financial services professionals aren’t cut from the same cloth. Humans occasionally do what humans do. If working with a financial professional is a concern for you, you might consider a robo-advisor or a hybrid human/robo-advisor relationship.

How to find a financial advisor

In this age of automation, it’s tempting to pick a financial advisor by simply Googling "financial advisors in my area." However, if you’re willing to pay the money to hire a financial professional, it’s worth doing proper research. The best feedback comes from the clients of financial professionals.

Therefore, talk with friends, family, and coworkers about who they use to manage their money and why. Ask them what they like and don’t like about their financial professional. It’s through these discussions that you’ll get an understanding of the type of services you want. You'll decipher whether you should hire a comprehensive financial planner who helps you manage your entire financial life, an investment advisory representative who manages specific assets or a financial professional who focuses on managing your retirement plan or finding a life insurance policy. (By the way, you can go here to learn about the pros and cons associated with buying life insurance from a financial advisor.).

Next, with your friends’, family and your coworkers’ feedback, find the financial professional who’s best with providing such services and research their associated fees.

For a more accurate and robust online search for a financial professional, use search engines, such as, GuideVine or XY Planning. These platforms research and vet the financial professionals they recommend to prospective clients. In addition to their preliminary research, these organizations do ongoing monitoring of the financial professionals they recommend and assist them in staying compliant with industry rules and regulations.

However, you don’t have to and shouldn’t solely trust any person or organization when choosing a financial professional. Fortunately for investors, the industry’s governing bodies provide a layer of protection and resources to help investors research professionals.

A history of self-regulatory oversight

The financial services industry has been highly regulated since the market crash of 1938. After that tumultuous crash and subsequent recession, Congress created the Securities & Exchange Commission, better known as the SEC.

At that time, two self-regulatory bodies, the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE), were formed to provide regulatory oversight of brokerage firms and stock brokers who agreed to their rules, regulations, and authority.

In July of 2007 and with the approval of the SEC, the NASD and NYSE joined forces and became the Financial Industry Regulatory Authority (FINRA). This unified body allows for more consistent regulations and oversight, which is better for its members and, most importantly, the investing public.

One of the many responsibilities of FINRA is to provide oversight of industry professionals, including individual brokers, brokerage firms and Registered Investment Advisors (RIA). Passing industry exams, earning various licenses and continuing education are required to claim the title of stock broker or RIA.

How to BrokerCheck your broker

FINRA’s website,, includes a tool called BrokerCheck that lets the public and other industry professionals vet brokers and RIAs. This tool is a great service for anyone who seeks the insight and guidance from financial services professionals.

BrokerCheck can be found on the top right corner of FINRA’s home page. Just submit a financial services professional’s name, their firm or their Central Registration Depository (CRD) number, and FINRA provides a full career history of that professional.

Some of the useful information BrokerCheck provides includes a list of the states where the financial professional has their licenses. Each state has unique requirements to sell securities within its borders or to residents within its borders.

Additional information about individual investment professionals includes:

  • Education

  • Employers

  • Tenure in the industry

  • Gaps in employment

  • Industry licenses

  • Industry certifications

  • Outside business activity

  • Complaints

  • Arbitrations

This is powerful information because it gives you a report of experiences other members of the investing public had with every investment professional and firm. Of course, not all claims are fair or accurate. Some clients look for any reason to sue for compensation. False claims are rare, though, and it’s good to know the claims against the person managing your money, either way.

Why consider a robo-advisor

Robo-advisors are "automated, algorithmic portfolio management" tools, (a.k.a., software) or, more entertainingly, robots that manage people’s money. They run mostly on quantitative data and, an investment strategy, such as Modern Portfolio Theory, Core & Satellite or Monte Carlo, aligned with an investor’s investment objective, investment goals, time horizon, and risk tolerance.

Robo-advisors will get better and more customizable over time, but customization is still currently a concern. The value of robo-advisors is they open up investment management to more investors because they’re "best for novice investors who want a simplified, automated, affordable way to grow their money." And, as we’ve learned, at least having a financial plan is a good thing.

If hiring an investment professional seems too risky or too expensive, consider using a robo-advisor like Betterment or Wealthfront.

"Unless you’re involved and experienced with investing, use a robo-advisor," Zina Kumok of says. "They’re simple to use and monitor. Many robo-advisors, unlike investment professionals, have no-to-low minimum account requirements and relatively low management fees."

Go hybrid.

If you’re not comfortable going all-in with either an investment professional or a robo-advisor, use both in a hybrid relationship. In fact, to help lower fees, many investment professionals recommend robo-advisor solutions to manage certain portions, often the core or index portions, of investors’ portfolio. There are even companies based on the hybrid approach. WealthSimple, for instance, is primarily a robo-advisor, but also offers unlimited calls with licensed financial professionals.

Robo-advisors make getting financial advice more accessible to more people. They, also, reduce the risk of human error and misconduct. However, as with an individual investment professional and as mentioned above, it’s wise to use FINRA’s BrokerCheck to research the firm that owns or advertises robo-advisor services.

Disclosure: We may use affiliate codes when linking to third parties. These codes earn us a small commission, but their presence does not influence which services or apps we choose to recommend, or our reviews of them.

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