(NewsNation) — Financial advisers can help you plan and prepare for the future, but there are several things to keep in mind to make sure you get the most bang for your buck.

A good financial adviser can help you accomplish your goals, whether that’s buying your first home or retiring comfortably.

But before you shell out for expertise, you should understand how advisers get paid and your current financial situation.

“There is research that using a financial professional can be beneficial, but it really depends on what you’re investing in by yourself,” said Micah Hauptman, director of investor protection at the Consumer Federation of America.

Here’s what to consider when deciding whether to hire a financial advisor.

What do financial advisers do?

Financial advisers help you make decisions about what to do with your money. That guidance can take many forms.

They can help you create a budget, save for major purchases, set money aside for retirement and actively invest your money so it grows.

“Financial adviser” is a catch-all term for a variety of financial professionals you might consult, but that doesn’t mean they all have the same credentials.

For example, certified financial planners, or CFPs, must meet rigorous training requirements and pass an exam. On the other hand, someone can call themselves a financial coach and have no credentials at all.

In some cases, financial advisers may not even be human. Robo-advisers are affordable digital options that offer automated, algorithm-driven financial advice and have become more popular in recent years.

How can they be helpful?

A good financial adviser will help you plan for the future and accomplish your goals. They can walk you through what you need to do to send your kid to college or retire at a certain age.

Advisers can help build and manage your investment portfolio, rebalancing assets to make sure you’re on track.

A 2022 Vanguard report found advisers can potentially add 3% or more to a client’s net returns by choosing cost-effective investments, rebalancing based on their risk tolerance, behavioral coaching and more.

Advisers also provide peace of mind, especially when markets are volatile. They offer an objective, long-term perspective that can be hard to maintain if you manage your own money.

Making an emotional financial decision at the wrong time can have serious negative consequences — good advisers protect against that.

How do financial advisers get paid?

Financial advisers don’t work for free, so it’s important to understand what you’re paying and what you’re getting in return.

There are several ways a financial adviser can get paid:

• Flat fee: Paid for providing a one-time service, like preparing a financial plan
• Hourly fee: Paid by the hour, often for specific projects
• Annual fee
  • Fixed: Paid a yearly retainer for their services, which doesn’t change based on the amount of assets
  • Assets under management (AUM): Paid a percentage — typically 1% for in-person advisers — based on the value of the assets they oversee
• Commission: Paid a percentage of the financial products that they sell

“It’s important that investors understand how they’re paying — and how the financial professional is paid — to understand what the incentives and conflicts of interest are,” said Hauptman.

For example, let’s say you want to free up some money for a down payment. An adviser who gets paid on the assets they manage may be biased against you withdrawing funds.

Meanwhile, advisers who receive a commission could be incentivized to steer you toward specific funds, even if it’s not what’s best for you.

Is a financial adviser worth it?

Whether a financial adviser is worth the cost depends on your financial situation and the type of support you’re looking for.

Hauptman said there are certain instances, like receiving an inheritance or preparing to retire, where talking to a financial planner makes sense. Dealing with debt is another example.

In other cases, a financial adviser might not be necessary. Even with their expertise, it’s rare for advisers to consistently outperform the S&P 500 — which means if you’re playing the long game, you could be better off investing in an index fund and saving yourself the fees.

“It’s very difficult to beat the benchmark; however, if you are getting advice and investing in a more complex portfolio and getting other services for those costs then it may be valuable,” Hauptman said.

What are the risks?

As with any profession, some financial advisers are better than others, but there are red flags you should be aware of.

First, be skeptical of any adviser who makes promises too good to be true. Success in the stock market takes time and typically doesn’t happen overnight.

Second, watch how they communicate. You should look for someone who is upfront about their fees and can explain them clearly.

“If they use a lot of jargon and make things seem overly complicated, then that could be a red flag,” Hauptman said.

Be wary of anyone who says you won’t pay any fees by investing with them, he added.

It’s also worth reviewing an adviser’s disciplinary record. You can use FINRA’s broker check tool to research a financial professional’s background.