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7 mistakes people make when choosing a financial advisor
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Research suggests that people work with a financial advisor could end up with 15% more money to spend in retirement.¹ | Photo provided by SmartAsset
Life should be a balance of adventure and relaxation — not finances. Enter: Working with a financial advisor. But choosing the wrong one could wreak havoc on your retirement.

According to a 2022 Northwestern Mutual study, over 60% of US adults think their financial planning skills need improvement — and yet, only 36% of them work with a financial advisor.1

Why? With thousands of options available, it can seem daunting to choose one. Plus, it can determine your financial trajectory for years to come. But some things are better left to the professionals. While advisors are prohibited from promising returns, research suggests that people work with a financial advisor:
  • feel more at ease about their finances, and
  • could end up with 15% more money to spend in retirement.2
So, how does that play out over time?

Let’s pretend we 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: 2x 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 how do I find one?

SmartAsset’s no-cost tool simplifies the time consuming process of finding an advisor. A short questionnaire matches you with up to three vetted financial advisors serving your area, each legally bound to work in your best interest. In many cases, you can be connected instantly to compare and decide on the best fit for you.

Ready to know what to look out for? Check out SmartAsset’s list of seven mistakes to avoid when choosing an advisor so you can work towards a more comfortable retirement.
 
Asked
 
What’s your million dollar question?
Take this quiz to find a vetted advisor who can help answer your questions.

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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