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Editor’s note: This is a guest post from Kristy Ramirez
You’ve heard of financial advisors. You’re thinking of getting one. But where should you start? Before you choose a financial advisor, you need to ask these ten questions.
I. Do I need a financial advisor?
In days past, only the wealthy used the services of a financial advisor. After all, they were the ones with the big bucks to invest in stocks and bonds. But financial advice is no longer for wealthy investors! If you make money, if you hope to save for your future, if you’re not sure where to start – a financial planner is there to help you!
II. What type of advisor am I looking for?
Often, by the time we seek the advice of a financial planner, we’ve spent years toiling through hand-to-mouth living and are finally coming out the other side. If this is you, you’re looking for a planner to help you look at investments for the future.Sometimes, we know we need to be saving but can’t see our way out of debt to even begin. If this is you, you’re looking for a planner with a focus on debt reduction, who will eventually bring you to a place of saving and investing.Other times, we find ourselves going through life unprotected by vital insurance policies. If this is you, you’re looking for a planner who will help you find ways to protect your family first, and invest next.
III. How many years of experience does the advisor have?
The more complicated your financial situation, the more experienced financial advisor you’ll need. A young advisor has the benefit of lower rates, but probably lacks the experience to assist you in finding tax-saving opportunities both in your business and your family’s finances.The more places your money is tied to (family, business, savings, real estate, children’s education, retirement, etc.), the more important it is for you to find an advisor with many years experience under his or her belt.
IV. Have there been any complaints registered against the planner?
The U.S. Securities and Exchange Commission (SEC) outlines how to search for information on specific brokers, advisors, or firms. It’s as easy as a phone call or a few mouse clicks to find out if the advisor you’re looking at has been accused of unethical conduct.
V. What certifications does he/she hold?
Are you confused by all the acronyms behind a financial advisor’s name? CFP, ChFC, AICPA and more! Here’s a great cheat sheet written by Chris Parry of InvestorGuide, detailing the meaning of each of those certifications.On a side note, if there are no letters following your financial planner’s name on a business card, you probably want to keep looking. Unfortunately, there are too many people out there who either want to scam trusting folks out of their hard-earned money or truly believe they can just call themselves a financial planner because they know a lot about money.
VI. What type of clients does the planner specialize in?
Find out the typical client profile for this advisor or firm. Does he or she usually work with people who are in a similar income bracket to you? Who are in a comparable financial situation (whether it be dealing with debt or ready to take some risks in the market)?If you’re a blue collar, middle class worker, with fairly low debt but also a low risk tolerance for your investments, hiring a planner who deals in multi-million dollar deals will result in frustration, miscommunication, and misunderstanding. That advisor simply won’t know how to meet your needs.
VII. How is the advisor paid?
Financial advisors can be paid by commission only, fee-for-service (often an hourly rate), or a combination of the two. Your cash flow and investment plan will somewhat dictate the best way for you to pay. If you’re not comfortable paying a commission, you can save yourself some wasted time by not even meeting with planners who work on commission.
VIII. Who will really be taking care of my investments?
Will the advisor you meet with be the only person handling your financial plan and investments? Is an assistant generally assigned to deal with the day-to-day details of your portfolio? Does their office use a team approach? Who takes care of things if your advisor is out sick or on vacation?
IX. Can I work with this person long term?
Making major decision, such as who to trust your money to, require a certain “gut” instinct. You want to deal with someone you feel comfortable with, with whom you have a good rapport, and whom you believe you can trust.If his or her personality rubs you the wrong way, if there’s something that you can’t quite put your finger on that makes you feel un-trusting towards that particular advisor, or if your spouse gets that bad feeling – go with your gut.
X. Can I get it all in writing?
Every single question you ask of an advisor, and every answer provided, should be offered to you in writing. Never commence a financial relationship without a legal and binding contract (one that you have your own attorney look over).Now that you’ve considered all the ins and outs, from whether or not you need a financial advisor to whether you’ve found someone you can work with long term, you’re ready! So make a few appointments, meet with a few different advisors, ask yourself and them your questions. All that’s left to do is make a decision. Who is the right financial planner for you?
About Author: Kristy Ramirez writes for Life Insurance Finder where she helps people to compare life insurance quotes and select the best policy to meet their needs at the best possible price.
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