When it comes to financial planning, millennials face some unique obstacles that set them apart from previous generations. Between student loan debt, flatlining wages and a less than rosy outlook for Social Security, investing for the future is challenging to say the least. Enlisting the aid of a financial advisor can make navigating the waters a little easier. Financial advisors are not one-size-fits-all, and there are some key considerations millennials need to be aware of when choosing one. (For more, see the tutorial: Become Your Own Financial Advisor.)

Defining the Advisor's Role

Someone who's in their 20s or early 30s is going to have very different financial needs than someone who's nearing retirement age. For millennials, the first question they need to answer is what their expectations and goals are for hiring a financial advisor. This makes it easier to narrow the field of potential candidates.

For instance, if the focus is on building wealth you would want to choose a financial advisor whose primary expertise centers on investing. On the other hand, if you're more concerned with basic money management, such as saving or developing a strategy for paying down debt, you would need to look for an advisor who offers a broader range of services. (For more, see: How to Select a Financial Advisor.)

Robo vs. Traditional Advisors

The next question for millennials choosing an advisor is whether to use a robo- advisor or go the traditional route. Robo-advisors use computer software to guide wealth management decisions for their clients. This type of advising is more passive and as a result, it tends to carry fewer costs than working with an advisor face to face. The initial investment minimums also tend to be lower, which may be a plus if you're investing on a shoestring. (To learn more about robo-advisors, see: A Guide to Choosing the Best Robo-advisor.)

For tech-savvy millennials who are comfortable with a hands-off approach, robo-advisors are certainly appealing but there are some drawbacks to consider. For one thing, robo advisors are focused on investing, and wealth management and they don't take into account financial goals outside of that scope. A traditional advisor, on the other hand, would be able to evaluate an investor's overall financial situation and offer customized advice on things beyond investing, such as paying down debt or building an emergency fund.

Robo-advisors can also be problematic when the market takes a downturn. If panic sets in, investors may be tempted to sell off their investments. A traditional advisor would be able to help gauge what the right move is whereas a robo advisor wouldn't offer any argument as to why selling would be a mistake. Having this human element involved can be especially helpful to millennials who are relatively experienced at playing the market.

Comparing Advisors

When choosing an advisor, millennials can't afford to skip out on their due diligence. The following is a rundown of the most important factors to weigh before making a final decision.

Education and Professional Certification

Financial advisors are not created equally, and it's important to be familiar with the kind of education and professional licensure that's required to bear the title. A Certified Financial Planner, for instance, must pass meet certain requirements established by the Certified Financial Planner Board of Standards to offer advisory services. A CFP is equipped to offer guidance on financial planning in general as well as specific topics such as insurance and taxes.

An investment advisor, by comparison, specializes in offering recommendations on investments. Becoming a Registered Investment Advisor involves passing the Series 65 Exam, which is administered by FINRA and registering with the Securities and Exchange Commission. Choosing an advisor with these or other professional certifications ensures that you're dealing with someone who's qualified to offer financial advice.

Services
The kinds of services a financial advisor provides typically tie into what type of certification they have. When considering advisors, millennials should look at the full range of services that are available to see how this fits with their individual goals. Ideally, you want to find someone who's adept at handling the most common financial questions and issues that 20- and 30-somethings deal with most often.
 
Reputation
An advisor's professional reputation speaks volumes and millennials shouldn't be shy about checking a candidate's background. With a Certified Financial Planner, for example, verifying their certification is a good place to start. FINRA's BrokerCheck tool can be used to look up information for investment advisors.
 
Word-of-mouth is also an effective way to measure an advisor's credibility. Asking trusted friends or family members who have used the advisor's services in the past or checking their ratings on public review sites can provide some useful insight into their background.
 
Accessibility
Paying a financial advisor is pointless if they're not able to answer questions or give advice when needed. Millennials who are looking into a traditional advisor should pay close attention to their availability, what methods of communication they use and their response time. The same goes for the customer service team when considering a robo-advisor.

Fees

Financial advisors don't work for free, and they can vary widely in terms of the fees they charge and how they're assessed. Some may charge a flat fee for certain services while others may charge a commission that's based on a percentage of what's being invested. Reading over the fee schedule thoroughly is essential, particularly for millennials who may be operating on a smaller budget. (For guidance on how to save money on advisory fees, see: How to Cut Financial Advisor Expenses.)

The Bottom Line

Picking the right financial advisor in your 20s or 30s is essential for your long-term outlook. Getting bad advice early on can put you at a serious disadvantage down the road. Being clear about what your goals are and what you're hoping to get out of a relationship with a financial advisor can guide you towards the one that's the best fit for your situation.

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