Should I Use the Financial Advisor Through My Bank?

Woman meeting with an advisor at her bank
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Many banks provide the option to use their financial advisors for your investments. They may even offer incentives such as lower fees or free checking if you have an investment account at the bank.

Note that your bank advisor is not a free financial advisor. Generally, there is a minimum amount that they want you to continue to have invested through them to maintain the services. You may want to work with your bank because you already have a relationship with them. However, it is important to make sure your bank's investment services are the right fit for you.

What Are the Advantages of Working With My Bank?

People will choose to use their bank because they feel that the advisor is more trustworthy or because it simplifies the process of looking for a financial advisor.

A bank's advisor will likely be able to offer you a wide variety of investments as well as life insurance options. The brokerage fees should be comparable to other financial advisors that work independently or for a brokerage house. It can be reassuring to have a reliable company and name when you are thinking about investing.

Even though it's nice to maintain an established relationship, you should find out what happens if you need to change banks because you move or for a similar reason. You may want to be able to leave your investments at the bank even if you do not have an account with them. 

What Should I Consider When Choosing an Advisor?

The things you should weigh when looking at your bank's advisor are really the same things you should consider with any financial advisor. Consider the following:

  • Some financial advisors will offer more than just investing services and can also help with life insurance and business planning needs. Determine what you want and need and then look for a good match.
  • Interview the advisor that you will be working with to see if you are a good match.
  • Look at the fees that the bank charges based on trades, meetings, and services.
  • How is the financial advisor paid? A person that is paid entirely on commission may be more likely to suggest products that do not fall directly in line with your investment comfort level.
  • Make sure you understand how their client relationships work: How often you will meet to review your portfolio and how will recommendations on purchasing new investments be handled?

How Do I Find a Financial Advisor?

As you look for a financial advisor, you need to consider all of your options and not just choose the one that is most convenient. Ask around. Don't be afraid to ask for referrals from other clients; this will let you know that the financial advisor is competent and reliable. You should also interview several and make sure that your financial advisor can explain the investment options to you and then let you make the choice.

A good financial advisor will listen to your goals and understand the amount of risk you are willing to take so they can find products that match those goals. They should be able to help you with creating a financial plan. Additionally, they should be able to explain the risks and benefits of each investment option and show you how to spread your investments out over several options and in different risk categories to protect yourself. If they can't do this, you should find a new financial advisor.

Be thorough when you are vetting financial advisors. Here are few tips:

  • Take the time to interview several different advisors before you make your final choice.
  • Ask for referrals from people you trust.
  • Ask the advisor if they have clients who would be willing to talk to you about them.

Is My Money Protected?

Finally, it is important to realize that, if you do choose to go with your bank's financial advisor, the FDIC does not insure the funds that are in investment accounts. It is a common misconception, but your funds are no safer investing through your bank’s brokerage department than they are using an online brokerage firm. That is why you should consider all options before making a choice.

Although there is risk involved with investing, it is one of the best ways that you can begin to build wealth. As you invest, it is important to remember that the markets may go up and down. You'll get the best results by weathering the low times and leaving your money in the market. A financial advisor can help you understand market dynamics and make better financial decisions.

Unless you have seriously studied the stock market, getting help from a professional is one of the best ways you can begin investing money. You may want to start by using a financial planner or investment advisor and then begin making investments on your own once you understand the markets more. It's normal for your investing approach to change over time.