5 Mistakes People Make When Choosing A Financial Advisor

Helping people make smart financial decisions

Choosing a financial advisor is a significant life decision that can determine your financial trajectory for years.

A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person, and advisors are legally prohibited from promising returns. Still, 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.

Consider this example: A recent Vanguard study found that, on average, a hypothetical $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 25 years, compared to 5% from a self-managed portfolio.

Here at Copley Financial Group, Inc., we simplify the process of working with one. A short questionnaire helps you connect with one of our advisors for a complimentary consultation.

Whether you work with us or with someone else, here are some mistakes we've seen during our careers in this area. Knowing these seven common errors 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. Fiduciary financial advisors must avoid conflicts of interest and disclose any potential conflicts of interest to clients.

If your advisor is not a fiduciary and constantly pushes investment products on you, they do not have the best interest in mind. All financial advisors at Copley Financial Group, Inc. are registered, fiduciaries.

2. Choosing an Advisor with the Wrong Specialty

Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Before signing the dotted line, be sure to understand an advisor's strengths and weaknesses. That's why you can check our team's capabilities here, where you can see where they focus on.

3. Picking an Advisor with an Incompatible Strategy

Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. That's why aligning plans is paramount to establishing a great relationship.

4. Not Asking about Credentials

To give investment advice, financial advisors are required to pass a test. Therefore, ask your advisor about their licenses, tests, and credentials. Our financial advisors' credentials include the Series 7, Series 66, or Series 65.

5. 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 severe conflict of interest. That's why we charge a fee-based compensation here at Copley Financial Group.

We provide value that involves more than just investment advice. Our advice is an outcome of personal relationships and comprehensive planning. We thrive on delivering an extraordinary retirement planning experience by crafting sophisticated plans that unite all the parts of your financial life together.