Finding a financial advisor online has never been easier.

Investing businesses and entrepreneurs have sprung up all over the place during the last few years. What exactly is their objective? To overcome the financial services industry’s previous failure to deliver tailored but cheap advice to investors with modest financial resources. These individuals will be around for a long time. Traditional brokers (and online financial advisors) now allow investors to trade stocks and exchange-traded funds (ETFs) for free, which has had a significant impact on the overall sector.

In this Guide:

  • Understand the Types of Financial Advisors
  • Specific Types of Online Financial Advisors
  • Choose Which Services You Need
  • Find the Best Online Financial Advisor for You

Understand the Types of Financial Advisors

Financial advisors come in a variety of shapes and sizes, from coaches to certified experts. It’s crucial to think about your personal financial goals and desires, as well as your personal style, while considering different sorts of financial consultants.

Among the several financial advisors you’re likely to encounter are:

  • Financial coaches normally don’t have any formal qualifications, but they may have a certification. These financial counsellors, in general, work with you to improve your mentality and fundamental financial literacy.
  • Financial advisors: You may anticipate this type of advisor to assist you in navigating your money and devising a strategy. While financial planners are not required to be certified, it is beneficial to find someone who is a Certified Financial PlannerTM (CFP®) or has another credential, such as those at Facet Wealth. This is due to the fact that CFPs have a fiduciary duty to you.
  • Investment advisors: These are financial advisors that can assist you work out your portfolio and manage your investments. Look for an investment advisor who is registered with the SEC (RIA). Many internet counsellors are registered investment advisors (RIAs).
  • Financial consultants are advisors that have extra certificates, such as the Chartered Financial Consultant® (ChFC®), and may have fiduciary responsibilities.

Wealth and investment managers, as well as accountants and estate planners, are examples of additional sorts of financial consultants. Many online financial advisors provide a wide range of services, with the ability to add on more services.

Specific Types of Online Financial Advisors

1. Custom Advising

After a phone call or an online session, these experts will create a personalised investment portfolio for you. They take a classic human-assisted approach to financial planning.

Anyone who needs some guidance in the early stages of investing is their target market. The average income of these folks is $75,000.

Leading Custom Advising Advisors

Financial Advisors 
Paladin Registry
Learn More
Paladin Registry is a free service that will match you with five-star rated advisors in your area.
SmartAssetOpen AccountSmartAsset will pinpoint a few recommendations of advisors that might fit your needs
Facet Wealth
Learn More
Facet Wealth connects you with a dedicated financial planner who will help you with everything from retirement planning, to managing your assets and more.

2. Tech-assisted Online Financial Advisor

This sort of online organisation focuses on combining technology-assisted financial advice with face-to-face interaction. Many astute investors are getting more at ease with using computer programmes to invest their funds, and this form of advisor is ideal for them.

Younger investors, such as Millennials, are a common target market for them, as they tend to rely on technology for financial guidance and investment decisions. Tech-assisted advisors, on the other hand, aren’t exclusively for the younger generation. If you’re seeking for an alternative to a traditional advisor, this could be a fantastic option.

Leading Tech-Assisted Advisors

Personal Capital
Learn More
Wealth Management: First $1 million: 0.89% ; $1-3 million: 0.79%; $3-5 million: 0.69%; $5-10 million: 0.59%; Over $10 million: 0.49%Min. Deposit: $100,000
M1 Finance
Learn More

Choose Which Services You Need

When looking for an online financial advisor, you need to compare apples to apples. Take a step back and review your options to determine what’s likely to work best for you. Here are some factors to consider:

1. Service Offerings

Begin with the services available. Do they have what you’re looking for? Betterment, for example, is primarily an investment and portfolio manager, but it also provides assistance with other parts of long-term financial planning. You have the option of speaking with a financial counsellor about specific goals such as education planning or retirement planning.

In general, though, finding an online counsel who can accomplish everything for you may be difficult. You might be able to find someone who can assist you with investments and financial planning, but they may not be able to assist you with estate planning or tax preparation. Before you go, be certain of what you require from each service.

2. Robo vs. Human Advice

One of the benefits of using the internet to discover a financial advisor is that you can work with someone who meets your needs even if they don’t live in your neighbourhood. This can be a major benefit in the long run.

Consider whether a human touch is preferable to an algorithm. Using smart technology to provide diverse asset allocation and planning recommendations is one of the ways online financial advisors keep prices down. You’ll get a set of recommendations that is slightly tailored to you. However, they aren’t actually suited to your specific needs.

This may be sufficient for some people. Look for an online adviser with human coaches if you want some personal engagement or customised insights from a human advisor. Because customers want that extra personal touch, robo advisers are increasingly offering the ability to talk to a human by phone or video.

Determine whether you require the human element before evaluating online financial advisors.

3. Management Fees

In many cases, there will be some sort of management fee associated with your online financial advisor. Pay attention to these fees, since they can reduce your real returns over time.

Many robo advisors charge relatively low management fees. And then they charge extra if you sign up for an in-person planning session. Others charge slightly higher management fees but provide access to a certain number of planning sessions with an advisor.

4. How the Advisor Is Paid

Also, pay attention to other ways the advisor is compensated. With a robo advisor, it’s fairly straightforward. You pay the management fee, and that’s how they make their money.

But there are other models followed by some advisors. Some are fee-only, meaning they take a percentage of your assets under management or they charge a flat fee for some of their services. With fee-only advisors, their compensation comes from you.

Other advisors take commissions. When an advisor takes a commission, it’s important to understand that they might steer you toward a product that doesn’t work well for you. While advisors who include commissions as part of their compensation aren’t necessarily bad, it’s important to be aware of it.

5. Investment Options

Look at what types of investments are offered by the advisor. For the most part, online advisors tend to focus on using low-cost exchange-traded funds (ETFs) to construct their portfolios. Some offer a variety of mutual funds too. Most also let you buy individual stocks. And some advisors offer alternative investments.

Realize, though, that the more exotic the investment offering, the higher the fees are likely to be. Find out whether the investment options work for you, and pay attention to their expense ratios.

6. Account Minimums

Make sure you’ll be able to meet the account’s minimum requirements. Some online advisors do not have a minimum account balance, so you can begin with any amount. Others, on the other hand, may demand you to invest at least $100 or $500 – or even more. If you work with a human advisor, you might have to pay even more to open an account. Look for an advisor that can deliver the services you require while maintaining a manageable account minimum.

7. Types of Accounts Managed

Not all online advisors work with the same types of accounts. Few robo advisers, for example, offer a 529 college savings plan. However, Wealthfront can assist you with one. Advisors can assist you with retirement accounts, trust accounts, and taxable investment accounts, among other things. Consider what types of accounts you’d like to open and find an online financial advisor that can assist you with them.

8. Licenses, Certifications and Background

Last but not least, look for licences and qualifications. Also, look into the background of any potential advisor you’re interested in working with. If you’re working with a human advisor, be sure their licences are current and that their qualifications match their knowledge and experience.

Finding out if they work with folks in your circumstance might also be beneficial. When looking for a tax preparer, for example, you could choose someone who has experience with online work or who works with small business owners.

Use BrokerCheck to determine whether there are any pending actions against the person before signing up for investment advisory services. You can also seek for complaints at the Better Business Bureau and the Consumer Financial Protection Bureau.

Find the Best Online Financial Advisor for You

Choosing an online financial advisor is a crucial step toward securing a secure financial future. Consider your options and choose someone who is a good fit for your circumstance and needs. It’s quite fine if your circumstances change. Look for someone who can assist you in determining your current and future requirements. Keep in mind that different advisors provide different services. You can also employ multiple types of services or have multiple financial planners.


No responses yet

Leave a Reply

Your email address will not be published. Required fields are marked *