How to Choose a Financial Advisor
How to choose a financial advisor is the main concern of people who want expert advice on how to properly manage their financial investments.
Advisors have different training, competencies, backgrounds, experiences, and strategies. When you have the right advisor by your side, you can rest assured that your investments will be handled much better and your returns will be much greater than if you had gone the self-management route. More specifically, a competent advisor will help you with such financial matters as retirement and estate planning, investment selection, and tax saving.
Rules on How to Choose a Financial Advisor
Is there a fixed set of rules on how to choose a financial advisor? Experts offer countless tips on picking the right one, but there are pointers that apply to everyone and must be remembered at all times.
Do not entrust your finances to the first advisor you meet. Take the time to interview at least three financial advisors to determine which among them can best serve your needs. Insist that the meeting be held at the advisor’s office so you can take note of how efficient and professional the company conducts its business.
Conduct a background check. Advisors earning commissions from selling securities must be registered with the Financial Industry Regulatory Authority (FINRA). FINRA’s website has a search function that enables clients to check on an advisor’s performance and credentials.
Advisors charging fees to clients, on the other hand, must be registered with the Securities and Exchange Commission (SEC) or with the appropriate agency in their respective states. Similarly, clients can use the SEC website’s advisor-search function to verify an advisor’s background.
Most advisors only take on clients who meet their minimum asset size requirement. So you don’t waste time and effort, make sure to call an advisor first to ask about his minimum requirement.
Talk with advisors about their previous advising experiences, investment philosophies, risk management approaches, and how they earn their financial advisor salary. It would be best to understand how they are being compensated for their services.
Inquire whether the advisor is a fiduciary, someone who, by virtue of his regulatory status, can be held legally liable or sanctioned by the government should he put his financial interests above those of his clients.
Keep in mind these basic rules on how to choose a financial advisor so you can take comfort in the thought that whoever you’ll hire will advance your financial interests above all else.
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