Choosing a financial advisor is a critical decision that should be given proper consideration. Entrusting your wealth to the wrong person or entity can have devestating effects. However, making the right selection can increase your wealth and provide security for you and your family for generations to come.
Below are the top 5 questions to keep in mind when talking with a financial advisor.
Question #1: Advisory Certifications
The advisor’s certifications will show how much experience your advisor has. Keep an eye out for a certified financial planner (CFP) and chartered financial consultant (ChFC). Each require a substantial amount of experience. They also reaquire that certain levels of coursework be completed and that a background check come back clean.
Question #2: Services Provided?
Decide if you are looking for someone to manage your investments or more in-depth financial planning and wealth management services. Below are the most common services that are offered by advisors:
Retirement, Trust and estate, Tax, Educational expense, Insurance, Cash flow, Business succession planning and Charitable giving.
Question #3: Client Portfolio
Find the number of clients your advisor has and what types of clients he or she specializes in serving. There are different areas of speciality:
Finding the right fit for you is important since you want an advisor who understands you and your unique circumstnaces and challenges.
Question #4: Is a Minimum Investment required?
It is customary that, in order to invest, a client maintain a minimum amount of assets in order to open an account and to thereafter keep it open. Some advisors only work with clients who have a certain minimum amount to invest. This amount can range from $1,000 up to millions of dollars. If this doesn’t work for you, consider a “robo-advisor” to keep fees and account minimums as low as possible.
Question #5: Investment Philosophy
What is your advisor’s approach to investing? This all comes down to personal preference – some advisors will craft a portfolio accorindg to the needs of their individual clients, while others allow the client to select from model portfolios which are assigned to clients based upon need. Advisors are also in the business of risk – some are risk averse, some are more aggressive. You need to know which style suits your advisor best. In some instances, your advisor may believe that preserving your assets is best as opposed to taking an aggressive stance.
If you do not have an aggressive personality or mentality, you do not want to align yourself with an aggressive, risk-taking advisor. It just makes no sense.
If you are risk-averse, select a conservative financial advisor. Reconciling your outlook with that of your advisor at the outset of the relationship will save misunderstandings in the long run.
In all, you should take the requisite time to interview several financial planners before you make a decision. Check their reviews online and make sure you meet with them in person at their office. Observe how they dress, speak and carry themselves. Find out about their company and also how long they have been with the company. If their background checks out and their investment philosophy is in line with yours, consider giving them a trial run with a few of your preferred investments before allowing them access to all of your finances.
This is the best and safest course of action to take, especially in such an uncertain economy as we are experiencing at this time. Make sure your advisor is accessible, available and responsible. Nothing is more frustrating than looking for your advisor and not being able to locate him or her.
Take this process seriously and you will be handsomely rewarded with an increase in wealth and a decrease in financial worry.