How to Choose a Financial Advisor
Choosing the right financial advisor is not easy because you want an advisor who can perfectly understand your financial situation and help you solve your problems. Usually, there are many financial advisors in your city, and it is important to speak with several so that you can make an informed decision.
Experts recommend considering both objective and subjective factors. The purpose is to choose a trust able advisor. In today’s article, we will give you a few tips to help you make the right decision when assessing financial advisors. Read on!
Decide what kind of help you need
Unfortunately, the term financial advisor is often unregulated. Most people don’'need from the advisor. Most financial advisors will focus on one financial area.
For example, he or she can be an investment manager, an insurance salesperson, a tax preparer, or work in other financial professions. So, if you need help in one financial area, these professionals are awesome options for you.
Also, some advisors offer more holistic help to people. Such professionals focus on several areas of financial planning. A holistic approach looks at your overall financial status and considers all factors while developing a unified plan to accomplish your financial goals.
A fee-only financial advisor
Most financial advisors would make money via sales and commissions. Today, this is a common practice, but it comes with various challenges. For example, when a person is paid at different commission levels, he or she will sell their solutions, which earn them the most money.
However, if you paying your advisor on commission, it does not mean he or she will give you bad advice. Insurance brokers get paid through commissions, but the commission system creates a conflict of interest, which must be disclosed or navigated.
On the other hand, you can consider a fee-only financial advisor who does not get sales incentives or any commissions. These are types of advisors that receive compensation for services in advance. It means you will have to pay him or her a fixed amount of money.
Choose an independent financial advisor
You can choose an independent financial advisor. It is a person who does not work for a particular financial firm or company. The independent advisor usually gives you the best solution for your financial problems. The freedom enables them to shop around for the low-cost solution in case there is availability for multiple similar options.
If your advisor is not independent, then it means he or she may not access multiple solutions for your problem. Remember, limited choices can cause over-priced recommendations or less ideal solutions.
Consider an experienced advisor
Empathy, humility, competency, and experience are a few characteristics that you should look for in the financial advisor. Experts say that empathy is the most important characteristic.
When your advisor understands your feelings and communicates with you regularly to address your problems, then you can achieve your financial objectives. So, while choosing the advisor, make sure you find about their experience and reputation in the market.
|Thomas Moore is a proud American with a Bachelors Degree in Business Administration from the University of San Diego. He has been in the financial industry for many years holding numerous licenses in multiple states. He currently helps operate Cash King Loan Company and is our resident expert on all things finance and a great writer. LinkedIn Profile|