Per a Northwestern Mutual study, over 50% of Americans admit needing improved financial planning, yet only 35% leverage financial advisors. As FinanceHQ CEO Alex Choi explains, advisors create personalized plans tailored to one's financial goals: therefore he suggests more consumers should consider engaging their services. When evaluating advisors, Choi stresses finding fiduciaries, who are bound both legally and ethically to ensure the clients' best interests, at an affordable cost. He believes their goals-focused guidance can assist people at all financial levels.
"It's like going to the gym. You can go, and you can get your reps in, you can work out, you can get stronger, faster, healthier on your own. But if you have a specific goal in mind, and you want to achieve... a certain milestone, you use a personal trainer to achieve those goals," Choi tells Yahoo Finance, adding: "And that's what a financial advisor can really do."
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Video Transcript
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DIANE KING HALL: 6 in 10 Americans say they need to be better about financial planning. But fewer than 40% use a professional advisor to do so, according to a study by Northwestern Mutual. Advisors can help create and implement a personalized plan for people's individual financial goals. But deciding who will manage your money can be a daunting decision. So what should you consider when looking for your match?
Alex Choi is the CEO of Finance HQ. The site matches investors with the right financial advisor for their needs. So Alex, thanks for joining us today. So let's talk about-- I feel like we're talking about like a dating app, if you will. What should people be thinking about when they're looking for a financial advisor?
ALEX CHOI: Yeah. No, thanks for having me. So there's a long number of questions that you should really highlight when you are going into that first discovery call. And we actually have a list of those on our site. But we want to make sure that they are picking and choosing the right ETFs and portfolios, your investment strategy.
One of the most important questions to ask is, are you a fiduciary? Are you morally and legally obligated to put my best interests first? And I think this is more of an obvious question. But what's the fee structure like? Am I going to be able to afford this particular service?
SEANA SMITH: And now I know you work with financial advisors, so you're a little bit biased with this question. But does it always make sense to have a financial advisor? And I guess when more specifically should people start thinking about hiring their financial advisor if that is the right route for them?
ALEX CHOI: Yeah. No, it's a great question. And I genuinely believe that every single American out there can benefit from the services of a financial advisor. I mean, you might be straight out of college and have amassed a mountain of debt, and you're looking to start saving and you're not sure exactly what to do, a financial advisor can create a financial plan for you and help you start chipping away at that, start saving up for things, and really create, like, a goal-based plan.
DIANE KING HALL: But what's the, I guess, case for a traditional financial advisor, when we live in a world now, we saw the rise of robo advisors? And now the proliferation of AI and generative AI and what it can do in a variety of fields, including financial advising. What's the case for a typical traditional human advisor versus a robo advisor or some form of AI?
ALEX CHOI: Yeah. No, I think that there's Betterment, Wealthfront, those robo advisors, digital advisors, they're excellent platforms for a certain demographic. The way I always kind of looked at it is it's like going to the gym, right? You can go and you can get your reps in. You can work out. You can get stronger, faster, healthier on your own. But if you have a specific goal in mind. You want to achieve a certain milestone, you use a personal trainer to achieve those goals. And that's what a financial advisor can really do.
SEANA SMITH: Talk to us a little bit more about fees and minimums. Right. It's one of the first things that maybe you should ask just in terms, or at least have a better understanding of when you're hiring that financial advisor. How does it work and what's that top thing that people need to keep in mind?
ALEX CHOI: Yeah. I mean, there's I think one of the things that you really want to ask is, are you a fee-only advisor? Are you getting commissions on anything that you're selling or kind of trading on? And you really want to make sure that they have, again, your best interest in mind. What's the fee structure? And am I going to be able to afford this on a monthly or quarterly basis?
DIANE KING HALL: Does the CFP mark matter now?
ALEX CHOI: It does. We genuinely-- we actually work with almost only CFPs. And we want to make sure that they've created a good financial plan for these individuals. Again, when you have that CFP designation, it also means that you are a fiduciary. So you are putting their best interests at first.
SEANA SMITH: What do you see just in terms of the interest on your side. We're talking about the fact that we're in an economic slowdown. A lot of people are worried just about what exactly their budgets look like. Are more people turning to financial advisors right now?
ALEX CHOI: Absolutely. We're seeing more people than ever come to us now, especially in this economic uncertainty. It's exactly when people start looking around for guidance and help.
SEANA SMITH: It's important to best understand obviously, your own financials. Alex Choi, great to have you here. CEO of FinanceHQ. Thanks so much.