How to Choose a Financial Planner
A financial planner, or financial advisor, can help you get a clearer picture of what your financial picture actually looks like; from savings accounts to expenses, to where your investment accounts currently stand. Do you know how to how to choose a financial planner? Having an expert set eyes on something like finances is always a good idea, as the average person can miss some pretty important details without help.
The last thing you want is someone who isn’t qualified for the job handling your finances. This can lead to financial disaster or even ruin if the person you’ve hired has no idea what they’re doing. Make no mistake; there are people masquerading as qualified professionals and charging for services they have no business operating in.
Checking your advisor’s credentials is easy with adviserinfo.sec.gov. From there, you can find a firm or single professional advisor that can help you get your finances in order, without the hassle of checking for credentials. These professionals listed at AdviserInfo are already registered and have the credentials required to operate as a financial planner/advisor.
Decide if You Need Human Help
Robo-advisors are a newer concept, but they’ve been saving investors money for years now. With an average fee structure of around 0.25%, robo-advisors are incredibly affordable for new investors especially. Keeping your costs as low as possible when you first start investing is essential; you wouldn’t want to be taken out of the game by fees alone before you even get started.
What Kind of Advisor/Planner Do You Need?
Advisors need to make money by performing their services, so if you’re living on a paycheck-to-paycheck basis, an advisor probably won’t be able to help you. This is because the fees they charge would likely be more than you can afford, and most advisors aren’t going to lower their fees to help someone get out of their debt.
It’s a good idea to refrain from looking for an advisor until you can afford to pay for their services. Usually, if you have enough money to start investing, you should be able to afford to hire an advisor.
Once you’ve decided that you need an advisor, and can afford one, you’ll want to decide what kind of advisor you need. There are two sets of standards that financial advisors work under that separates them into categories: those that follow the suitability standard and those that follow the fiduciary standard.
An advisor who follows the suitability standard is legally obligated to make sure the investment is suitable for you as an investor, and they’ll work off of commissions. The investments these advisors choose don’t necessarily have to be what’s best for you, just what’s suitable for you; leaving room for them to choose more expensive investments for greater commissions.
Those advisors that follow the fiduciary standard are more apt to make investment decisions that keep clients (that means you) happy. They’ll want their clients to stick around, so making better decisions is just part of the customer service standard.
Whichever advisor you choose, be sure they’re following regulations and not making poor decisions with your money. It’s a good idea to figure out (or just ask) what standard the firm follows before agreeing to sign a contract.
Check Reviews or Ask For Referrals
A good way to find a great financial advisor is to ask for referrals from your friends, colleagues, or family who have also invested. If they had a good experience with a particular firm or individual, be sure to get their information so you can benefit from the same level of service.
If your advisor has their own website, or the firm itself has a site (which it should), there will likely be a testimonial or reviews page. This is a good place to start when choosing your firm, as the people who’ve employed the firm’s services will know better than anyone what their quality of service is.
Be Ready to Pay a Fee
The fees charged by advisors/planners will differ based on the kind of work they’re performing. For investment advisors, you’ll likely pay a percentage of your portfolio’s value, and if you’re hiring a planner to create a financial plan, you’ll likely pay anywhere from $1,000-$2,000 for help, and a monthly retainer should you need continuous advice and guidance.
Remember that advisors don’t work for free, and you need to spend money to make money. Having that expert set of eyes on your portfolio or overall financial picture can prove incredibly useful, however. It’s safe to say that hiring an advisor or planner is well worth the cost if you’d like your investments handled by someone who knows what they’re doing.
Always remember to check your advisor’s credentials and discuss their fee structure upfront. Check their customer testimonials and reviews to be sure you’re working with someone who is professional and honest in their work and opt for a robo-advisor if you’re new to the game and want to get a feel for how advisors work without the high fees of a human advisor. That’s how to choose a financial planner.