1. Ask how your advisor gets paid

It is important to understand how your advisor gets paid. The reality is that you are going to have to pay an advisor for their advice and services. Some advisors offer an initial consulation for free. After that, an adivsor will typically charge you in one of three ways.

Fee only advisors - A fee only advisor will charge you a percentage of the assets that your advisor manages. For example, say you had $100,000 invested with your advisor and they charged a 0.5% fee. Each year, your advisor would charge you a $500 fee (0.5% of $100,000). Your advisor would take this fee whether your $100,000 went up or down in value.

Fee based advisors - A fee based advisor will also charge you a percentage of the assets that he or she manages. However, fee based advisors can also make commissions from certain investments they recommend to you. For example, an advisor might recommend a certain mutual fund for you. When you invest in that mutual fund, your advisor may make a 3% to 6% commission.

Flat or hourly fee - Finally, an advisor may charge you a flat or hourly based fee for their services. For example, an advisor might charge you a flat $3,000 per year to manage and invest your money. An advisor who bills by the hour might charge between $120 and $300 per hour of work they do for you.

Which of these is best?

If you plan on working with your advisor for an extended period of time, it might be best to work with a fee only advisor as it can be more transparent than working with a fee based advisor. By no means is it wrong for an adivsor to use a fee based model and make money off investments that they recommend to you, especially if the investment is in your best interest.

However, since a fee based advisor makes money off of commissions, it can sometimes be hard to tell if their recommendations are truly in your best interest, or if they are trying to squeeze more money out of you. With a fee only advisor, you won't run into this problem.

2. Ask about qualifications

It is crucial that you vet your advisor and make sure that they are qualified to give you financial advice and manage your money. You can ask general questions about their educational background, as well as their overall experience in the financial services industry.

You can also ask about their specific certifications that allow them to provide financial services. For example, ask if they have a CFP license, Series 6, 7, 63, and 65 licenses. These licenses probably sound like technical jargon, but essentially they allow an advisor to sell investment products and provide financial advise to you as a client.

You can verify any information that your advisor gives you about their qualifications by using FINRA's broker check tool for free. Simply type in the name of your advisor, as well as they area they are based in and FINRA will show you what licenses that individual holds.

FINRA is the Financial Industry Regulatory Authority and "is authorized by Congress to protect America's investors by making sure the broker-dealer industry operates fairly and honestly."

3. Ask about all of the services they offer

You want to make sure that your advisor offers all of the services you need. Ask yourself what are the things that you really need help with. Do you need help creating a complete financial plan? Do you need help choosing your investments? Do you need help minimizing taxes? Once you figure out what you need help with, look for an advisor that offers specific services to meet those needs.

4. Ask about their investment philosophy

A good financial advisor will have a set belief system about how to invest and manage your money. You want to make sure that your advisor has an evidence based investment philosophy. Ask your advisor how they typically invest and manage other clients money and the reason why they do it that way.

You also want to make sure that your financial advisor has a long term vision. Building wealth is something that takes time. If your advisor only speaks about things in the short term, or recommends risky investments, it is best to stay away.

For example, an advisor's investment philopsophy could look like this. "Our investment philosophy is to invest over the long term in things you understand, diversify among assets, minimize the impact of taxes, and make sure you can access your money when you need it."

5. Make sure your values align

Finally, you want to work with an adivsor that has the same value as you do. Although lots of advisors could help you reach your goals, you ultimately want to work with someone that you can build trust with. Look for an advisor that has a teacher's heart, works with integrity, and truly listens to your concerns and needs.

The short answer is that it depends. A financial advisor is by no means a necessity. Many individuals are able to successfully manage their own money. However, there are several reasons that can make an advisor worth it.

1. You don't have investing knowledge or experience

A financial advisor can be worth it if you simply don't have alot of experience or knowledge around investing or financial topcis. A good advisor will be more than happy to educate you on how investing works, and how your specific financial picture works.

2. An advisor can keep you accountable

Even if you have the head knowledge to manage your own money, an advisor can keep you accountable. Having an advisor can make sure you are sticking to a plan that will help you reach your individual financial goals. Without this accountability, it can be easy to ditch your financial plan or make unwise decisions.

3. Studies show you will have more money when you work with a financial advisor

An advisor can actually make you more money. A study conducted by Vanguard found that working with a financial advisor can increase your net returns by about 3% per year or more. Keep in mind that this is an average over time, and does not happen every year.

Although a 3% difference seems small, it can make a huge difference over time. We should note that an advisor does not magically find investments that make an extra 3% per year. Instead, Vanguard attritubed this 3% increase to "behavioural coaching."

Like other coaches, an advisor can help you avoid financial pitfalls to keep you on track. Vangaurd also noted that an advisor can help in other areas as well including asset allocation, minimizing costs as you invest, rebalancing the investments within your portfolio, how to withdraw your funds effectively, and more.

One of the biggest hurdles to working with a financial advisor is meeting the minimum investable assets requirement. In other words, a lot of financial advisors require you to have a certain amount of money in order to work with them. This requirement can easily be in the tens or hundreds of thousands of dollars.

If you don't have that lying around, you could consider using a robo advisor. A robo advisor is a digital financial advisor that uses financial algorithms to choose and manage investments for you. When you sign up for a robo advisor, you will be asked a series of financial questions.

Based upon this information, the robo advisor will choose investments that are best for you. Robo advisors are often cheaper than traditional financial advisors and don't require that much money to use them. If you want to learn more about robo advisors, you can click here.

The downside to using a robo advisor is that it can't create a complete financial plan like a human advisor can. However, if you don't have the money to work with a financial advisor yet, you can use a robo advisor to grow your money and then transfer the money from your robo advisor to a financial advisor when you are able to meet the minimum requirement.

We looked at the following criteria when looking for the best financial advisor services.

1. Nationally available - The first thing that we looked at was if the financial service was nationally available so it could be accessible to as many people as possible.

2. Fees - Secondly, we looked at what sort of fees the service charges. If the service uses an AUM (assets under management) pricing model, we included services that had fees below 1% per year. If the service charges a flat rate fee, we included services with reasonable fees based upon the service offered.

3. Minimum investable assets - We looked for services that did not have an excessive requirement to get started. We only included services that have a $100,000 or less minimum requirement to get started.

4. Services offered - We looked at advisor's who offer a wide range of financial services to make sure that you have the help you need.

5. History - Finally, we looked at services that have had a good track record. In order to make our list, the service has been in business for at least 5 years.