Financial advisors advise clients on how to best invest, save and grow their money. Anyone can hang out a shingle as a financial advisor, but that does not make the person an expert. This makes choosing the right financial advisor seem daunting. The secret to finding the right financial advisor is knowing what type of advice you need. Below is a guide on what to check or what to know before choosing a financial advisor.
There are set training requirements that defines a financial advisor. To be able to get the best advisor, check for credentials the advisor has and learn whether he/she stays up to date with the current developments and changes in the financial management field. Look for advisors who have either a diploma or degree qualification in fields such as finance, accounting, economics or financial planning. Check if the advisor is a certified financial planner (CFP) or Chartered Financial Consultant (ChFC). Other qualifications include Registered Investment Advisor (RIA), Certified public Accountant (CPA) and Personal Financial Specialist (PFS)
It’s always important to know the advisors work experience .Professional standards indicate that professional financial advisors must have at least three years experience. Ask for professional certification designations or licenses. You can still ask the advisor about his/her former typical clients. This will enable you judge whether they have enough experience to deal with some kind of problems.
It’s worth noting that an advisor who has recently graduated might be highly qualified but is less experiences as compared to an older advisor with fewer qualifications.
Some advisors will only provide advice on specific areas while others prefer developing a holistic plan that will bring together all your financial goals. Some will only advice you on your investments while others will offer a comprehensive financial planning around your insurance, retirement, tax and estate planning. Some offer advice on a range of topics but avoids selling financial products. Before making a choice, make sure that the viewpoint of the advisor is neither too cautious nor overly aggressive for your risk tolerance
Payment of services
Some advisors are paid based on hourly or flat rates, others are paid on a percentage of your portfolio value known as Asset Under Management(AUM) and others are paid based on commission per transaction. Whether you want your money to be managed proactively or how often you expect to trade will help you choose the advisor who best meets your needs.
Ongoing professional development and professional association membership
Like any other industry ,there are changes and development that might affect clients .Professionals are required to attend regular training activities such as seminars run by professional bodies or industry associations. Check if the advisor is a member of any professional body and if he/she participates in ongoing training, has a mechanism for handling complaints or follow the body’s code of conduct.
Some advisors give hold initial planning meeting and disappear for a year. Others have quarterly check-ins. Some clients need financial advice once a year while other needs constant support. Depending on your financial interest, choose an advisor who will be available when you need him. Some advisors work as team. If one is not available at a time, a team mate can still be at your service. Such advisors are better in that their services are available all the time. On top of that, they offer better services since they can consult each other to come up with the best advice.