How to Choose a Financial Advisor

Learn how to match the right type of advisor to your goals, decode fees and check anyone's record before you sign. According to CFP Board, there were 107,529 CFP professionals in the US as of Dec. 31, 2025, but "financial advisor" by itself isn't a credential.

Say you've just left a job and need to decide what to do with your old 401(k). You search for help and find dozens of people calling themselves financial advisors. Some owe you a legal duty to put your interests first, while others mainly sell products.

That's the core problem when you're figuring out how to choose a financial advisor: titles aren't credentials. What matters is registration, legal duty and how the person gets paid. If you'd rather invest on your own or with a robo-advisor, comparing investing platforms side by side may be a simpler first step.

One update older guides miss: advisory fees aren't deductible on individual federal returns, and a 2025 law made that permanent. BestMoney compares financial products and isn't an investment adviser, so we have no advisor to sell you. Below, you'll learn how to find a financial advisor in five steps: define your needs, pick a type, decode fees, check records and interview candidates.

To choose a financial advisor, define what help you need and pick the advisor type and legal standard that fit. Then confirm how they're paid, verify their record on public databases and interview at least three candidates using regulator-written questions.

Step 1: Define What You Need Help With

Start by naming the job you need done, because different professionals handle different jobs. Common needs include investment management, comprehensive planning, retirement income, tax strategy, debt and budgeting help, or a one-time check of your plan.

Think of it like health care: you wouldn't book a surgeon for a routine checkup.

If your main goal is building a budget or an emergency fund, you may not need a paid advisor yet. Start with our guide to building an emergency fund, then revisit advisor help once you have a cushion.

Step 2: Choose the Right Type of Advisor (and Legal Standard)

The right type of advisor is one whose legal duty matches the trust you're placing in them. "Financial advisor" and "financial planner" are generic job titles, while Registered Investment Adviser (RIA) is a registration and CFP is a certification. The SEC's Investor.gov says the key question is whether a professional is registered with the SEC or a state.

Under Reg BI, a broker can't put their own financial interests ahead of yours when making a recommendation, according to SEC press release 2019-89. Picture a fiduciary as a guide hired to look after your whole trip, while Reg BI governs each recommendation a broker makes along the way.

One person can hold more than one role. So ask, and get the answer in writing: "Are you a fiduciary at all times, for all of my accounts?"

A robo-advisor may be enough for straightforward, long-term investing. A human is worth considering for complex situations, like owning a business, an inheritance or drawing down retirement savings.

Hybrid platforms sit in between. J.P. Morgan, for example, pairs CFP professionals who act as fiduciaries with a robo option, while Stash bundles robo investing into a subscription. These are examples of how the models work, not a ranking.

Step 3: Understand How They're Paid

Advisors are paid through fees, commissions or a mix, and each model carries its own conflict of interest.

AUM is the dominant model. According to 2024 Kitces Research, 92% of advisors use AUM fees in some way, and 86% use AUM as their primary pricing method.

Common AUM fees run about 1.00%–1.20% a year for portfolios under $1 million, falling to about 0.80%–1.00% above $2 million, per the same Kitces data. In plain terms, a 1% fee on a $500,000 portfolio is $5,000 a year. Kitces Research also puts the average standalone comprehensive plan at about $2,400, a ballpark figure.

Small percentages compound into big dollars. In the SEC's hypothetical example on Investor.gov, $100,000 growing 4% a year for 20 years ends at about $208,000 with a 0.25% annual fee. Raise the fee to 1.00%, and the same portfolio ends at about $179,000, roughly $29,000 less.

This is an illustration from Investor.gov's "Understanding Fees" page, not a forecast of real returns.

Tax note: Advisory fees aren't deductible on individual federal returns. The Tax Cuts and Jobs Act suspended the deduction starting in 2018. The One Big Beautiful Bill Act of 2025 made that permanent, according to a 2025 Katten Muchin Rosenman client alert.

Compare total cost the way you'd compare APRs on a loan. Ask for the all-in figure, including fund expense ratios, not just the advisory fee.

Step 4: Check Their Record Before You Meet

Before your first meeting, check four free public documents and databases, in this order:

1. Form CRS. A plain-English relationship summary required since June 30, 2020, covering services, fees, conflicts, standard of conduct and disciplinary history.

2. Form ADV Part 2A. The adviser's brochure, with 18 disclosure items that include fees, conflicts of interest and disciplinary history.

3. FINRA BrokerCheck and SEC IAPD. Free searches that show registration and disciplinary history for brokers, brokerage firms and investment adviser firms, both reachable through Investor.gov.

4. CFP.net/verify. CFP Board's lookup that confirms whether someone currently holds CFP certification.

Think of Form CRS as a firm's nutrition label: short, standardized and easy to compare.

Checking matters because misconduct isn't rare. A Journal of Political Economy study by Egan, Matvos and Seru used 2005–2015 records. It found about 7% of advisers, roughly 1 in 14, had misconduct records.

That share topped 15% at some of the largest firms, and about a third of advisers with misconduct were repeat offenders. So check the firm as well as the person.

On BrokerCheck, look for:

• Customer disputes or complaints

• Regulatory actions or sanctions

• Frequent moves between firms

If you can't find someone at all, treat that as a warning. Investor.gov notes that unlicensed, unregistered people commit much of the investment fraud in the US.

Step 5: Interview at Least Three Candidates

Interview at least three candidates and ask each the same questions so you can compare answers side by side:

• Are you a fiduciary at all times, and will you put that in writing?

• How are you paid, in total dollars, on an account like mine?

• Who holds my assets, and is it an independent custodian?

• Who is your typical client?

• How often will we meet?

Then add two "conversation starters" the SEC requires in Form CRS:

• "Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs…"

• "How might your conflicts of interest affect me, and how will you address them?"

Walk away if you spot any of these red flags from the SEC and FINRA.

Chemistry matters too. Notice whether they explain things in plain language and lead with a plan for your goals rather than a product to buy.

This guide is for anyone hiring a first advisor or rechecking a current one:

• If you're just starting out: Hourly or flat-fee planning, or a robo-advisor, may fit a small balance and simple finances.

• If you're a couple or family juggling goals: Look for a CFP professional who offers comprehensive planning.

• If you're within 10 years of retirement: Prioritize retirement-income and tax expertise, and get fiduciary duty in writing.

• If you have complex needs: For a business, inheritance or equity compensation, consider a fee-only RIA working alongside a CPA.

• If you're comfortable investing on your own: A one-time plan review may be enough, with a hybrid platform for occasional human help.

Smaller balances have more options than many people assume. According to 2024 Kitces Research, 66% of AUM-fee firms have an asset minimum, but 90% waive it occasionally or regularly.

You're not alone if you asked a chatbot first. BestMoney's 2026 AI financial advice survey found 58% of Americans have used AI for financial guidance, and 82% trust AI for financial information. AI can teach you the terms, but the legal duties in Step 2 apply to registered professionals.

Your next move is to turn this checklist into a shortlist:

1. Set your retirement savings target first, so you know what you're hiring help for.

2. If you lean DIY, compare investing platforms and IRA options before paying for advice.

3. Shortlist three advisors through CFP Board's LetsMakeAPlan.org or NAPFA's directory, then run each name through BrokerCheck.

4. Download each firm's Form CRS and bring its conversation-starter questions to every interview.

The short version: match the need, confirm the legal duty, price the total cost, check the record and compare at least three candidates.

What is the average fee for a financial advisor?

According to 2024 Kitces Research, common AUM fees run about 1.00%–1.20% a year for portfolios under $1 million and fall for larger ones. Step 3 covers the other fee models.

What is a red flag for a financial advisor?

Guaranteed returns, pressure to act now and an advisor who won't use an independent custodian are warning signs flagged by the SEC and FINRA. Step 5 lists more.

How much money should I have before getting a financial advisor?

There's no legal minimum to hire an advisor. Many firms waive their asset minimums, and hourly or flat-fee planners can work with smaller balances.

Are financial advisor fees tax deductible?

Not for individuals on federal returns. The 2025 One Big Beautiful Bill Act made the Tax Cuts and Jobs Act's suspension of the deduction permanent.

Is a robo-advisor enough, or do I need a human advisor?

A robo-advisor can cover straightforward, long-term investing. A human or hybrid advisor helps most with complex tax, retirement-income or estate decisions.

This guide relies on secondary sources; BestMoney didn't run a proprietary survey on advisors for it. BestMoney's editorial team reviewed SEC and FINRA guidance, CFP Board's Code and 2025 certificant data, and 2024 Kitces pricing research.

We also reviewed a peer-reviewed misconduct study and legal analysis of the 2025 fee-deductibility change. Then we noted what top-ranking and AI-cited guides leave out. Our 2026 AI survey, cited above, covers AI use, not advisors.

• U.S. Securities and Exchange Commission, "Commission Interpretation Regarding Standard of Conduct for Investment Advisers," Federal Register (2019)

• U.S. Securities and Exchange Commission, press release 2019-89 on Regulation Best Interest and Form CRS (2019)

• CFP Board, "Code of Ethics and Standards of Conduct" (effective 2019)

• CFP Board, "CFP Board Reports Record Growth in CFP Professionals and Exam Candidates in 2025" (2026)

• CFP Board, "Verify a CFP Professional"

• Kitces Research, "How Financial Advisors Actually Charge for Their Services" (2024 data)

• Kitces Research, average financial plan fee analysis (undated)

• Investor.gov, "Understanding Fees"

• Investor.gov, "Check Out Your Investment Professional"

• Investor.gov, "Investor Bulletin: Form ADV"

• Investor.gov, "Form CRS" relationship summary page

• Investor.gov, "Red Flags of Investment Fraud Checklist"

• Investor.gov, "Investment Professionals" titles guidance

• FINRA, "About BrokerCheck"

• FINRA, "Watch for Red Flags"

• Egan, Matvos and Seru, "The Market for Financial Adviser Misconduct," Journal of Political Economy (2019)

• Katten Muchin Rosenman LLP, client alert on how the OBBBA impacts individuals, businesses and estate planning (2025)

• BestMoney, 2026 AI financial advice survey (2026)