Financial planners can help their clients in multiple ways to improve their financial stability and form optimal spending habits.
They also help their clients formulate a reasonable strategy that will allow them to reach their financial goals. These goals can be short- and long-term goals. Some of the goals that individuals who hire a financial planner want to achieve include saving for retirement or consolidate debt.
Moreover, financial advisors are specialists in many areas including taxes, retirement, and investment. Each advisor has one or more areas of expertise, so they help their clients in different ways according to their skills and knowledge. You should evaluate your current situation and consider your needs to determine which type of advisor will help you best.
The most important aspect that you should look for in a financial advisor is that they are knowledgeable and truly care about your needs. You can read more below about finding the right financial advisor that can help you reach your goals for the future.
Learn About Their Background and Credentials
The most capable and qualified financial advisors hold credentials that certify them as a financial planner (CFP) or as a certified accountant (CPA). Credential holders must pass several tests and complete rigorous courses with a heavy workload. These are just some of the requirements planners have to obtain their certification.
Therefore, you should look into working along with a certified planner or accountant to receive more reliable advice. These certifications also require that planners abide by high moral codes and ethical practices. By hiring a certified planner, you are likely to receive high quality, reliable services.
Conducting a background check is also an important step before you choose a financial planner. You should make sure that any potential candidate is in good standing with the government and state regulations. Financial planners managing assets worth more than $25 million will have an ADV report.
You can access this report through the Securities and Exchange Commission. Any disciplinary action that the government might have taken against an advisor will be in this report. Other financial planners who manage smaller amounts of assets are required to register through a securities regulator within the state where they do business. Make sure you look for someone with the right credentials and a clean record to help you in your financial goals.
Learn About Paying for a Financial Advisor
Before hiring a financial planner, you should understand how they charge for their services. There are different pay structures financial planners have, but the most popular ones are by a commission and by a fixed rate.
Planners who charge by a commission might have other interests at heart different from helping you achieve your goals. For instance, they may offer you a product or service that is more expensive for you but not necessarily the most effective to help you reach your goals. Not all financial advisors with this pay structure work this way, but you should be careful and review if this type of service will be the best for you.
On the other hand, financial advisors with a fixed fee or flat rate will charge you by an hourly, weekly or monthly service. Some of these planners may also charge for their services based on a percentage of your portfolio. You should try to hire a financial advisor with this type of pay structure as they tend to be clearer and more direct about how much they charge.
You may also be able to negotiate with your financial planner about their fees. Even though giving you a discount for their services is not a requirement, they might offer you a better price depending on your goals and current needs. Make sure to record any agreement in paper to avoid any confusion in the future.
How to Pick the Right Financial Planner for You
After considering the financial planner’s certifications, background, and pay structure, you should choose the right fit for you. For this, consider your goals and current situation. It is important that you understand where you stand and where you want to get with your finances. Once you achieve this, you should choose someone with the same philosophy on money, who you trust and who cares about your goals.
The type of advice that you look for will also influence your choice. If you need some assistance with your taxes, hiring a certified accountant might be your best option. On the other hand, if you are concerned about setting a retirement fund, you should hire a specialist in financial planning. Some financial planners are knowledgeable in many areas, so they might be able to assist you with a wider range of services.
Based on your needs, this may be a better option for you to be able to build a stronger plan to achieve your goals.
Learn About the Final Steps
Once you have decided on the right type of financial advisor for you, you must schedule a meeting to meet with them. Many advisors offer free introductory sessions, so you should take advantage of this service.
You will get a better feel of the advisor’s style and their knowledge, which will help you determine if he or she is right for you. Take advantage of these initial meetings to ask about their expertise, previous work experience, and how long they have been in the business of financial advising.
Moreover, during the initial session, you should ask for any references that they may have so you can get more information about their previous work. Online reviews are another tool that will help you determine if an advisor is right for you. However, check several of them and do not let a single good or bad review influence your decision.
An ideal candidate will make sure to spend plenty of time answering these and more questions to you. They will also dedicate their time to properly asses your current situation and needs. You should hire someone that is genuinely interested in helping you improve your finances. Anyone that offers you advice without properly going over your needs may not have the honest intentions of helping you and may only be trying to get another client.
In case you hire someone, who might not be right for you later on your working relationship, you can always find another consultant that is right for you. For this reason, it is important you spend as much time as possible to make the right choice from the beginning.