5 Types of Financial Advisors — and How To Choose the Right One for You

Boomers: Here Are 5 Types of Financial Advisors — and How To Choose the Right One for You

Kellan Jansen   Thu, August 29, 2024  GOBankingRates

We all need financial guidance from time to time. But the type of advice you need can depend on your age. Baby boomers, for example, often need support with stretching their funds in retirement and creating spending plans.

 If you’re part of this generation and looking for a financial advisor, your search should reflect your goals. This article will lead you through a process that will get you to the right match.

The 5 Types of Financial Advisors

First, it’s worth reviewing how financial advisors earn money from their clients. There are a few different pricing models, and the one you choose could impact the kind of advice you get.

For instance, if an advisor earns a commission on every trade you make and then recommends an unusually large number of trades, that’s a red flag. You might not spot something like that if you ignore how your advisor makes their money.

With that in mind, there are five main types of advisors, based on Securities and Exchange Commission regulations.

Fee-only: These advisors are paid based on the assets they manage for you. They may charge a percentage of those assets, an hourly rate or an annual fee.

Commission-based: These advisors earn a commission based on the products they sell you but may not charge you much, if anything, directly.

Fee-based: These advisors charge fees based on the assets they manage and may still earn a commission.

Registered investment advisors: These firms generally charge an annual account fee or a percentage of assets invested.

Robo-advisors: These automated online platforms offer low-cost investing advice and earn money through various account and trading fees.

You can find financial expertise across each of these pricing models. However, if you want your advisor’s incentives to align fully with your own, it’s a factor to consider.

How To Choose a Financial Advisor as a Boomer

The baby boomer generation spans 18 years, from 1946 to 1964. That means the youngest boomers are nearing retirement, while the oldest may have already been retired for a decade.

Given this gap, it’s no surprise that even people within the boomer generation have substantially different financial needs. However, with the right process, you’ll end up with a great advisor regardless of your needs. Here’s how to get there.

1. Define Your Goals

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