3 Financial Advisor Red Flags You Should Watch Out For
A financial advisor can be an important part of your financial support system. But financial advice isn't free—the average fee-based financial advisor charges 1 percent of all assets under management (AUM), and many require you to have an account minimum of $50,000 or more to qualify for their services.
While there are affordable alternatives to traditional financial advisors such as robo-advisors, and online financial planning services, independent financial advisors can be valuable for managing investments, helping you set and reach money goals, and even help with estate planning. A 2019 study by investing platform, Envestnet PMC, estimates that an advisor can add 3 percent value on investments each year.
However, finding a financial advisor that you trust is crucial for reaping the benefits of having one. The process will likely require research and thorough vetting on your part. "It is essential to look at the red flags noted because these could be signs that the person offering advice has a conflict of interest, might not be giving advice that will work best for you, or is overlooking essential expertise," says Alissa Krasner Maizes, financial planner and founder of investment advisory firm, Amplify My Wealth.
Here are the red flags you should watch out for while seeking out a financial advisor—so you can be sure your money is in the right hands, and get guidance from someone who actually wants to help you build your wealth and reach your financial goals.