Picking a financial advisor who will be right for you is not easy, but being well informed and knowing exactly what you need will make the process much easier, writes Bernice Napach for The Wall Street Journal.

“The first question for consumers is: Why are you hiring an advisor?” said Micah Hauptman, director of investor protection at the nonprofit Consumer Federation of America.

However, there are many types of financial advisors, from financial planners and securities brokers to investment managers and insurance brokers.

Securities and insurance brokers sell financial assets. They are paid commission for the products they sell, which in the end can create some conflicts of interest.

Registered investment advisors prepare financial plans and invest client assets following these plans.

Wealth managers usually work exclusively for high-net-worth clients.

Finally, digital-only robo advisors produce computer-generated portfolios created exclusively from the information that the investor provides online.

There are also several designations for financial advisors but only a few indicate the expertise needed by most consumers.

A Certified Financial Planner, or CFP, is considered the most prestigious. It requires knowledge of over 100 financial topics, such as stocks, bonds, taxes, retirement, and estate planning.

A Chartered Financial Analyst, or CFA, focuses on investments, while Certified Public Accountants, or CPAs, combine tax expertise with personal financial planning knowledge.

There are three models in which financial advisors are compensated: commissions, fee-only, and fee-based, which is a combination of the first two.

Most consumer advocates propose using fee-only financial advisors as they are fiduciaries and have to act in your best interest. They can be paid in multiple ways, including through an annual percentage of your assets and hourly rates.

Fred Hubler, CEO and Chief Wealth Strategist for Creative Capital Wealth Management Group, suggests investors consider a third option; a retainer-based financial advisor. “We trademarked a retainer based wealth management program that does not require assets to be with us. That way, we can utilize low cost providers while giving our clients advice that is separate from their assets.”

Hubler continues “right now, the entire industry goes like this, give an advisor your money, they charge ~1%, they put your money in harms way (stocks and bonds) and then you can ask them for advice. A retainer-based financial advisor jumps right to the last step and allows clients to use them as a financial advisor on retainer.

“The funny thing is, no one even owned retainerbasedplanning.com so I bought it and it now goes to our main page”

Read more about how to research and select a financial advisor in The Wall Street Journal.

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