Having a financial advisor can make a huge difference to your life. Choosing the right set of financial goals and then making the right decisions about how to handle your money so that you can meet those goals can be complicated and difficult, especially if you don’t have a financial background and are not familiar with all the jargon. A financial advisor can help you through the thicket into the clearing.
What to Look For
There are several criteria to keep in mind when choosing a financial advisor.
- Chemistry: you need to be able to trust this person as much as you trust your doctor. This includes your sense of the advisor’s professionalism, knowing that you can be honest with each other, feeling completely comfortable in the advisor’s office and not hesitating to share personal details.
- Background and experience with clients similar to you: you want someone who not only knows the financial world, but also knows how to deal with clients in your particular situation. Someone who teaches elementary school and plans to do this until retirement is in a very different set of circumstances from a commodities market broker, and their financial advice should be different as well.
- Focus on you: you won’t necessarily have to talk to your financial advisor every day, but when you do need to talk, you should be able to gain access quickly. No waiting for return phone calls for a week, no unanswered emails, no missed appointments. Your advisor may have lots of clients, but you should always feel that you are at the top of the list.
- Certification: your financial advisor should have the Certified Financial Planner (CFP) designation, indicating a lot of initial specialized schooling as well as on-going education. There are other certifications available, but the CFP is the most difficult to obtain, and therefore, the most valuable.
How Will the Advisor Be Paid?
No matter how the advisor is paid, you should be completely confident that the advice you are receiving is always in your best interests. Fee-only advisors are usually paid by charging a percentage of the portfolio they manage for you, which includes giving you advice on what should be in the portfolio. Advisors who work on commission are paid when they sell and buy investments on your behalf. A wealth management bank that provides regular banking services can be a good option as well. Each of these types has its advantages, so when you’re doing your search, make sure you are clear on this point and choose the one that best fits your overall goals.
Don’t Go It Alone
You could make it your business to become a financial expert, but chances are that you have better things to do with your time. Working at a full-time job, raising a family, and having a little fun now and then are the things that rightfully occupy the lives of most people. No matter what stage of life you are in, no matter how much money you have now or want to have in the future, you should have a financial plan of some kind. An effective financial advisor will help you create a plan that is specifically tailored to your goals and objectives, and then work with you to follow the plan through all of your life’s stages. Overall, your advisor will relieve you of this large burden.