32% of Americans revealed that they do not trust the advice of financial advisors.
Many of us, however, have families, homes, and income that need to be safely protected.
If you didn’t know how to cook, you wouldn’t get in front of a stove without an experienced chef guiding you. Similarly, it is important to have an expert in directing the investments of your precious assets.
The right financial analyst can provide you with support, expertise, and tremendous peace of mind. Here are five essential tips on how to choose a financial advisor.
Different types of financial analysts specialize in different areas. An hour-long consultation, for example, is an ample forum for getting advice on purchasing a home, extending your education, or selling your business. You should be able to get an estimate for the hourly fee before you meet.
If, however, you need help managing your assets, you will be getting continuous advice from your analyst as your life develops and changes. In these cases, your financial advisor will be getting a percentage of the money they are managing for you.
Financial advisors can also provide you with intelligent advice on how to reach your financial goals, such as educating your children, retiring, and investing your money. When this is your aim, an advisor will probably charge you an hourly rate based upon the complexity of your situation.
Some financial advisors specialize in helping you develop a portfolio. Others may work in holistic management for clients with high net worth. It is important that you look for and choose someone who has worked extensively with the kind of investor you are.
Commission-based brokers sell insurance, annuities, and mutual funds. You will want to be sure that there is not a conflict of interest before hiring them. Commission-based brokers must meet a Suitability Standard, meaning that they have to make recommendations that are in your best interests.
Fee-only brokers have a fiduciary responsibility to act in a client’s best interests. They may charge you hourly rates, or their payment may be a percentage of the assets they manage for you.
Some financial advisors are Registered Investment Advisors. They may be registered with the US Securities and Exchange Commission, or with a state regulator.
Others are Certified Financial Planners. These individuals have completed a lengthy educational requirement that includes a bachelor’s degree. They also need to pass a six-hour CFP Board exam and have several years of experience.
You will want to do a background check and see if your prospective advisor has any investigations, bankruptcies, criminal charges, or unpaid liens against them. You can Google them and check their credentials.
You will also want to ask for a few current clients as references. Ideally, these clients should be using the same kinds of services you are looking for.
You will be sharing a lot of personal information with your advisor. Before you hire, you want to be certain that you are comfortable with them.
Ask for a list of examples of client reports before you hire. Have your prospective advisor explain the rationale behind their decisions.
If you are conservative with your money, be certain that the advisor you hire makes low-risk, high-return investments. You will want to be confident that your assets are being handled in a savvy way.
Anyone you trust with your assets should be someone with experience and a record of success. If are wondering how to choose a financial advisor, start by looking for credentials, a clean record, and excellent references.
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