Did you know that in 2020 alone, nearly 3.1 million people have financial advisors?
Having a financial advisor can help you invest wisely and protect your smart money. If you don’t already have one and want to learn how to choose the best financial advisor that you can trust, keep reading.
If you want to learn how to choose the best financial advisor for your needs, keep reading.
Here are some tips to help you find the perfect fit.
Determine Your Goals
You need to determine your goals. Ask yourself what you want to achieve financially and if you want to retire early. Also, you may consider you want to save for a child’s education, purchase a home, or build up a nest egg. Sometimes you may have multiple goals. If this is the case it may be best to go with a firm that offers a variety of specialists like the financial advisors at The Kelley Financial Group. This way you can have a team of advisors that specialize in all aspects of your plans for the future.
Once you know what you want to achieve, you will be in a better position to find an advisor that can help you reach those goals. You may look for independent financial advisers who can help you. You can check by visiting a website like Consilium first for more information.
Ask for Referrals
This could include family and friends, your accountant or attorney, or even other financial professionals. This ensures that you are getting recommendations from people who have first-hand experience with the advisor and can attest to their character.
When you get referrals, be sure to ask about the person’s experience with the advisor, what type of services they have received, and whether they would recommend the advisor. Don’t be afraid to ask for many referrals so you can compare and contrast different options.
See Their Credentials
There are many credentials that an advisor can have, but not all are created equal. Some credentials are more meaningful than others, and some are more easily earned than others.
The most important credential for a financial advisor is the Certified Financial Planner (CFP) designation. To earn the CFP designation, an advisor must complete a rigorous educational program. They need also to pass a difficult exam and agree to uphold the CFP code of ethics.
Other important credentials to look for are the Chartered Financial Analyst (CFA) and the Certified Public Accountant (CPA) designation. Yet, not all financial advisors will have all these credentials. Having one or more of them is a good sign that the advisor is knowledgeable and trustworthy.
Look for Online Reviews
It is important to look for reviews that are objective and unbiased. The best way to find these types of reviews is to look for websites that provide ratings and reviews of financial advisors. There are a few different websites that provide this type of information, so it is important to compare the ratings and reviews of each website before choosing one to use. You can also use google to look for reviews. To do this, just search “financial advisor Wollongong” or whichever town you live in. Now you can search through reviews left by real people. Afterward, you can also be directed directly to their web page.
Once you have found a website that you trust, you can then begin to look for reviews of a specific financial institution. When reading these reviews, pay attention to both the positive and negative aspects of the advisor.
It is important to check for red flags that could state the advisor is not trustworthy. Some red flags to look for include complaints about hidden fees, being pushy or sales-oriented, and lack of communication from the advisor.
You should also look for recent reviews, as this will give you the most accurate information.
Verify if They Are Licensed
One way to verify if a financial advisor is licensed is to check with your state’s securities regulator. You can do this by visiting your state’s licensing board website. Each state has its requirements for licensing, so you’ll want to make sure that your advisor is properly licensed in your state.
Another way to verify is to check if they are registered as an investment advisor with the SEC. You can do this by searching the SEC’s Investment Adviser Public Disclosure (IAPD) database.
You can also check with the Financial Industry Regulatory Authority (FINRA) to see if your advisor is a registered broker-dealer.
Request a Free Consultation
Asking for a free consultation is one of the best ways to get to know a financial advisor to get a feel for their personality and expertise and if they are someone you can trust. This is because you can get an idea of their financial practices and what they would recommend for your specific situation.
During this meeting, be sure to ask questions about the advisor’s investment philosophy and process. Also, how they would handle your specific financial situation?
Pay attention to how well the advisor listens to your needs and concerns. This is a great opportunity to get to know the advisor and see if they’re a good fit for you.
Determine Their Fees
It’s critical to determine the fees that the financial advisor will charge you. Consider also how you will pay them when selecting someone to help your money in managing finances.
Many fee structures exist, and what’s right for one person may not be right for another. Some common fee types include commission-based, hourly, and flat-rate fees.
Some advisors are “commission-based”, which means they earn a commission on the products they sell. This commission can vary, but it is a percentage of the product’s price. For example, if an advisor sells you a mutual fund with a 5% commission, they will earn $50 for every $1,000 you invest.
You can pay hourly fees to some financial advisors. This is a fee-for-service arrangement where you pay the financial advisor for the time they spend working on your financial plan. Make sure you understand what they include in the financial plan and what services they will provide for the fee.
Flat Rate Fees
A flat rate fee is a fee that you pay for their services regardless of how much money you have. You should also make sure you’re comfortable with the fees you’re paying. If you don’t understand the fee structure, ask your financial advisor to explain it to you.
It’s also important to factor in how the fee you will pay – whether it’s out of your investment account, through billing, or in some other way. And don’t forget to ask about any buried fees or kickbacks that may not be immediately obvious.
Know the Advantages of Having a Financial Advisor
Once you decide to hire a financial advisor, you should appreciate its purpose. A financial advisor can provide peace of mind. They can also help to reduce stress levels by providing a sounding board for ideas and acting as a second set of eyes on financial plans and decisions.
Financial advisors can offer objectivity and expertise when it comes to financial planning and investing. This can be invaluable for those who may be inclined to make impulsive or emotionally-driven decisions with their money.
Financial advisors can help to save time and energy by taking care of the research and number-crunching associated with complex financial institution planning and investing tasks. And finally, they can provide access to a wide array of financial products and services that may not be available to individuals who go it alone.
Lookout for Some Drawbacks of Having a Financial Advisor
One of the biggest disadvantages of a financial advisor is the potential for conflict of interest. Many financial advisors are compensated based on the products they sell and the commissions they earn, which creates a potential conflict of interest if their recommendations are not in your best interest.
Another disadvantage is that they may have ulterior motives. While fiduciaries are legally bound to always act in your best interests, some advisors may still push products that may not be the best fit for you. They may be more interested in making money for themselves than in helping you grow your wealth.
Finally, financial advisors typically have high minimum investment requirements, which can be a barrier for some investors.
Get a Second Opinion
You should always get a second opinion on your finances, as this will help ensure that you are making the best decisions for your future. It is also important to get a second opinion because you want to make sure that you are getting the best advice possible.
There are a lot of financial advisors out there, and not all of them are created equal. Some are better than others, and some are more trustworthy than others.
Choose Your Best Financial Advisor
When searching for the best financial advisor, be sure to determine your goal first, then check for credentials, reviews, ask for referrals, and if they are licensed. You can also ask for a free consultation and ask about their fees.
Finally, know the advantages and disadvantages of working with them, so be sure to get a second opinion before making a decision. Once you find an advisor you trust, be sure to work with them to develop a financial plan that meets your needs.
If you are looking for more tips, check out other articles on our blog today!