(865) 357-7370 kim@sdp-planning.com

IF YOU THINK ABOUT IT, the people who need a financial advisor are the ones who can’t afford one. If you’re impoverished or firmly in the middle class and can’t seem to make it to the next level, you’re the one who could really use financial advice. If you’re wealthy, you know what you’re doing.

Yet many financial advisors simply aren’t interested in working with the middle class. Many firms in recent years have stopped paying commissions to brokers for accounts that are considered small, including accounts ranging from $100,000 to $500,000 in assets. Firms that do take less than those minimums sometimes charge as much as 2% in annual fees, though 1% is more typical.

So what should a middle-class investor do to find a good financial advisor? Experts recommend following these tactics.

Know Where to Look

At the beginning of the process, you should think about what type of financial advisor you want to meet with: fee-based or commission-based. Think about what you’re looking for. Are you seeking help with investments and retirement planning, or simply someone to go to when you have questions? Some advisors include financial planning in their fees for managing your investments, while others charge a separate fee or hourly rate for advice.

As for where to find a financial advisor, there are several places, from the obvious to the unexpected:

  • Use an online advisor search. U.S. News & World Report has an online database of financial advisors across the country. You can use the search to find advisors in your area and learn more about their specialties and experience.
  • Ask friends, family or colleagues for recommendations. Obviously, you’ll be more likely to find somebody who will work with you if your friends, family members or colleagues are in a similar tax bracket as you are.
  • The Garrett Planning Network. Garrettplanningnetwork.com offers a map of the United States where users can click on a state and find a listing of financial advisors who cater to the middle class.
  • The National Association of Personal Financial Advisors. The association’s website, napfa.org, allows you to find a financial advisor near you. It isn’t for financial advisors who generally cater to the middle class, however. Still, you may want to take a look and see who shows up near your home.
  • Robo advisors. You may want to consider an automated portfolio management service as a cost-effective option. For example, with Schwab Intelligent Portfolios you don’t pay advisory fees or commissions, though you will need $5,000 to get started. Meanwhile, Wealthfront, another popular robo advisor, has a $500 minimum account requirement, and only charges an annual advisory fee of 0.25% on all assets under management deducted monthly.
  • The Accredited Financial Counselor website. “I would strongly encourage true middle-income people to look (at afcpe.org) for an accredited financial counselor,” says Justin Chidester, who is both an accredited financial counselor and a certified financial planner – as well as the owner of Wealth Mode Financial Planning in Logan, Utah.
  • Search engines. This one may seem like a no-brainer, but the power of search engines can’t be overlooked. Chances are a search engine is how you found your way here. So if none of the above prove fruitful, consider a quick Google search for “financial advisor near me” or “financial advisor for the middle class.”

 

You’ve probably heard of certified financial planners, but accredited financial counselors have been around for a while too, according to Chidester.

“They often have a focus on helping low- and middle-income people, at affordable prices, with topics relevant to everyone – saving, budgeting, paying debt, improving credit, preparing to buy a home and working through poor habits with money,” Chidester says.

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