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7 crucial mistakes to avoid when hiring a financial advisor

Don’t make these seven mistakes when hiring a financial advisor. | Photo by SmartAsset

It’s hard to talk about money. Money is a sensitive topic, and being honest with yourself (and others) about your financial situation can feel awkward or even embarrassing.

But knowledge is power, and if you could use little help in the financial planning department, you’re not alone. According to a 2022 Northwestern Mutual study, over half of US adults think their financial planning skills need improvement — and yet, just a third of them work with a financial advisor.¹

Why? While financial advisors can never guarantee good returns and financial success, hiring one is still a major decision that can impact the financial trajectory of the rest of your life. And research suggests that not only do those who work with a financial advisor feel more at ease about their situation, but could even end up with about 15% more money to spend in retirement.²

What can a financial advisor do for me?

Let’s pretend you have $500,000 to invest — a good chunk of change. According to a 2019 Vanguard study, here’s what that investment would be worth after 25 years:

$1.69 million with self-management alone
$3.4 million with a financial advisor (read: 100% more)

In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to just 5% from a self-managed portfolio.³

Okay... but where and how do I find one?

SmartAsset’s no-cost tool simplifies the time-consuming process of finding a financial advisor. Their short quiz helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

Even better, the whole process takes just a few minutes, and you can typically be instantly connected with an expert for a free retirement consultation.

Ready to know what to look out for? SmartAsset’s checklist of seven things not to do when choosing your advisor can help you find peace of mind — and save your family years of stress.

See all 7 mistakes

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Worried about retiring comfortably?

Answer a few questions to match with up to three financial advisors who can help you make the most of your retirement savings.

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Sources

^1.^{“Planning and Progress”, Northwestern Mutual (2022)}

^2.^{“Journal of Retirement Study Winter” (2020)}^{. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the}^{Journal of Retirement study}^.

^{3. Vanguard (February 2019), Putting a Value on Your Value The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please see the methodologies employed in the Vanguard whitepaper. To receive a copy of the whitepaper, please contact compliance@smartasset.com.}

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