Personal finances and investments can be complicated, and it's sometimes hard for middle-class investors to get good financial advice. More affluent households that have lots of money to invest will often work with a wealth management firm or financial planner to help choose investments and oversee their portfolios.
But people with less money to invest sometimes have a harder time finding a good financial advisor. Middle class investors are often vulnerable to bad advice, overpriced fees, outright misinformation, or aggressive investment sales pitches that don't actually improve their financial well-being.
Most people don't need a full-time financial advisor. You might just want to meet with someone once or twice a year, or hire a financial advisor for a short time to help you with a specific challenge or financial goal. Many people just need some occasional help to make sure their 401(k) is on track.
Alert: highest cash back card we’ve seen now has 0% intro APR for 15 months. Learn more here.
Fortunately, you have several options for getting reliable, trustworthy financial advice. Whether you have questions about investing, retirement planning, or other personal finance topics, there is help available for you. Let's look at a few options for how you can choose a financial advisor in 2024.
Work with a fiduciary financial advisor, not a salesperson
Before you work with a financial advisor, it's important to make sure they are working in your best financial interests. You might want to work with a fee-only fiduciary advisor. "Fee-only" means that the advisor only gets paid a fee for their work, not a commission for financial products they sell. "Fiduciary" means that the advisor has agreed to follow a high professional, ethical, and legal standard to put your interests first. The National Association of Personal Financial Advisors (NAPFA) offers a search tool on its website where you can find fee-only fiduciary financial planners near you.
More: Our picks for the best credit cards
What happens if you don't work with a fiduciary financial advisor? There are lots of people out there who call themselves "financial advisors," but they're actually just salespeople. If an advisor has not agreed to be your fiduciary, that means they could potentially sell you a stock, an investment, or other financial product that earns them a big commission -- but isn't the best fit for your financial goals.
This doesn't mean that you should never work with a stockbroker or an insurance salesperson. You can get good advice and valuable financial products from a lot of different people and companies. But if you want professional help from someone who will look at the full picture of your personal finances and make recommendations based solely on your best financial interests, you need a fee-only fiduciary advisor.
Good fee-only, fiduciary financial advisors won't just try to get you to buy stocks. They'll tell you what not to do with your money, what to stop doing, or what you could do better. They'll give you ideas and advice that you might not have thought of -- even if it means selling some stocks, canceling an overpriced life insurance policy, cashing out of a bad investment, or moving your money to a different brokerage. And they'll help you create -- and stick with -- a long-term financial plan to save for retirement and meet your other financial goals.
Types of financial advisors
There are a few types of financial advisors, and you can often sign up to work with an advisor for just a few hours at a time, or on an ongoing, annual engagement. Here are a few options for advisors that provide investment advice and other financial planning support.
Certified Financial Planner® (CFP)
A Certified Financial Planner® is one type of fiduciary financial advisor. If you see an advisor who advertises a CFP® behind their name, that means they've achieved the title of Certified Financial Planner®, and have agreed to put their clients' interests first. Many CFP® advisors can offer a wide range of financial planning and advice, such as retirement planning, investment management, creating an investment portfolio, helping you with tax strategies, and more.
Financial coach
Have you heard of executive coaches, business coaches, or life coaches? In the same way that these coaches help people get organized and motivated to tackle their personal and career goals, there is another type of coach: a financial coach. These financial coaches or "money coaches" are like personal trainers for your finances. Financial coaches do not always have the same professional training or credentials as a CFP®, but they can be helpful depending on your financial situation. If your personal finance questions are less focused on "how should I allocate my investment portfolio" and more concerned with "how can I budget and get out of debt," a financial coach might be the right fit.
Robo-advisor platform
Robo-advisors and online broker platforms mostly make investing automatic, with questionnaires and online guides to help you maximize your investment portfolio. But what if you want to talk with a real person about your investment questions?
Some of the best robo-advisors also offer personal financial advice from human advisors. For example, SoFi offers its customers unlimited access to Certified Financial Planners® who can talk with you about your investment goals and help you make financial decisions. Other popular investment platforms like Fidelity and Vanguard also offer financial advisor services for additional fees -- Vanguard requires a minimum amount of assets.
Bottom line: Even if your finances aren't suited to a high-priced wealth management firm, you can get good financial advice to support your investment goals. Look for a fee-only fiduciary financial advisor, a CFP®, a reputable financial coach, or an online brokerage with access to financial advisors.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
This credit card is not just good - it's so exceptional that our experts use it personally. This card featuresa0% intro APRfor 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
Readour free review
Introduction
As an expert and enthusiast, I have access to a vast amount of information and knowledge on various topics, including personal finances and investments. I've been trained on a wide range of financial concepts and have analyzed numerous articles, research papers, and expert opinions to develop a comprehensive understanding of this field. I can provide insights, explanations, and even code examples related to personal finance and investment topics.
Understanding the Article
The article you provided discusses the challenges faced by middle-class investors in obtaining good financial advice, particularly in comparison to more affluent households. It highlights the vulnerability of middle-class investors to bad advice, overpriced fees, and aggressive sales pitches. The article emphasizes that most people don't need a full-time financial advisor and suggests several options for obtaining reliable financial advice.
Let's break down the key concepts mentioned in the article:
1. Wealth Management Firm and Financial Planner: Affluent households often work with wealth management firms or financial planners to help choose investments and manage their portfolios. These firms provide specialized services tailored to the needs of high-net-worth individuals.
2. Challenges for Middle-Class Investors: Middle-class investors face difficulties in finding good financial advisors due to factors such as bad advice, overpriced fees, misinformation, and aggressive sales tactics. These challenges can hinder their financial well-being.
3. Options for Obtaining Reliable Financial Advice:
-
Fiduciary Financial Advisor: Working with a fee-only fiduciary advisor is recommended. A fiduciary advisor is obligated to follow a high professional, ethical, and legal standard that prioritizes the client's best interests. The National Association of Personal Financial Advisors (NAPFA) offers a search tool on its website to find fee-only fiduciary financial planners.
-
Stockbrokers and Insurance Salespeople: While not all stockbrokers or insurance salespeople are fiduciary advisors, they can still provide valuable advice and financial products. It's important to assess their recommendations in light of your financial goals.
-
Certified Financial Planner® (CFP): A Certified Financial Planner® is a type of fiduciary financial advisor who has achieved this esteemed certification and is committed to putting their clients' interests first. CFP® advisors provide comprehensive financial planning and advice, including retirement planning, investment management, tax strategies, and more.
-
Financial Coach: Financial coaches, also known as "money coaches," can assist with budgeting, debt management, and other personal finance concerns. While they may not have the same professional training as CFP® advisors, they can still provide valuable guidance based on your specific financial situation.
-
Robo-Advisor Platforms: Robo-advisors offer automated investment services, often with online questionnaires and guides. Some robo-advisors also provide access to human financial advisors. Examples include SoFi, which offers unlimited access to Certified Financial Planners®, and investment platforms like Fidelity and Vanguard.
These options provide middle-class investors with avenues to obtain financial advice and support their investment goals.
Conclusion
In conclusion, the article highlights the challenges faced by middle-class investors in obtaining good financial advice and suggests several options for finding reliable financial advisors. It emphasizes the importance of working with fee-only fiduciary advisors who prioritize the client's best interests. Additionally, it mentions Certified Financial Planners® (CFP®), financial coaches, and robo-advisor platforms as potential sources of valuable financial advice.
