How to Choose a Financial Advisor?
Since many of us are not well versed with the details pertaining to mortgages, insurance, investments, loans, and other financial matters, it is advisable that one seeks professional guidance from a financial advisor. To achieve such goals, it is important that you carefully choose a competent and experienced one.
Most people find one through the recommendations of friends, co-workers, and relatives. While such recommendations are always desirable, it is equally significant to know if he is able or willing to tailor his services to meet your particular requirements. It is a good idea to talk to several of them and compare the financial plans that they are offering. The following are the questions that one should ask them:
What are your Educational Qualifications? Do you have Legitimate Certification as a Financial Planner or a Public Accountant? Or a Bachelors or Masters University Degree in Financial Planning or Business Administration? Are you a Juris Doctor or a Registered Investment Advisor?
Educational qualifications are very important because they denote that the person has undergone extensive training in his field and so is professionally qualified to give you financial advice.
What Kind of Financial Services do you Offer? What Areas do you generally Cover?
These vary from Planner to Planner, depending on their educational qualifications, work credentials, work license, and knowledge.
Are you registered as an Investment Advisor with the Securities and Exchange Commission (SEC)?
Do you hold a Federal Securities License from the National Association of Securities Dealers?
This is needed if they are going to sell you securities.
Do you have a Clean Regulatory Record?
You can check up on this. A professional, selling securities will have a Central Registration Depository (CRD) file, providing his detailed work profile.
What Work Experience do you have? How many years have you been in this Business?
Ideally, he should have been in the business at least 5 years.
How many Clients do you have?
There should be enough of them to suggest experience and respectability, and not so many to indicate a lack of time to attend to your needs.
What kind of Clients do you have?
If there are other clients like you, the financial advisor will be better equipped to deal with your kind of situation.
Will you be working with me personally to Chalk Out my Financial Plan or will you be assigning an Associate from your Office?
Most of them have a good-sized staff to assist with the work, so this shouldn’t be a problem. This is just so that you know who’s handling your portfolio.
Can you give me some References?
He should give you at least 3 to 5 references. References should be from clients and professional colleagues from the finance field. After you have been given a list of references, make sure that you call them. Ask the clients about their experience with him. Find out from the colleagues what kind of professional standing the person has in his or her field.
Do I have to Sign a Contract to Hire your Services?
If a contract is required, stipulate that you be allowed to back out of the agreement in 30 days if things don’t work out to your liking.
How much will you Charge for your Services? How are you to be Paid for your Services?
Some of them charge fees by the hour or take a flat fee. Some take fees as well as a percentage of your total income. Some take fees, as well as a commission for the finance products that they recommend you to buy. If one works for a finance firm, you pay the firm, and they will pay his or her salary. In any case, at the start, ask for an estimate of the total cost. And never pay more than 50%, before the work is done.
Do you Consult with Outside Advisors? How often?
Finance is a vast and complicated field, and it is not possible for anyone person, however talented and exceptional he is to handle all the business aspects personally. He will undoubtedly refer to other professionals like lawyers, bankers, mortgage brokers, accountants, and others. If these people are going to be involved in handling your financial affairs, you should know about them.
What do you do to keep Abreast of Current Happenings in the Financial Field?
This field is in a constant state of flux, and if you are to receive creditable advice about your investments, he needs to have current up-to-date information. How does he go about getting this? Does he take refresher courses? Or regularly peruse trade publications?
Clarify everything that you don’t understand, and make a note of all other things that you would like to know and don’t hesitate to ask.