Hiring a financial advisor is like hiring a financial manager for yourself or your family. You have to use a disciplined process to find someone you can work with for many years. Finding the right person or company may take a little longer, but the investment of time will be worth it when it comes to your mind’s feasibility.
Here are the 5 steps to follow!
Know the types of Financial Advisors
Some financial advisors offer financial planning services but not investment management services. Others manage investments but offer little financial planning. Some have experience in retirement income planning and focus on those nearing retirement or who have retired. Others focus on accumulating wealth for people who won’t retire in the next 10 or 20 years.
The three main types of financial services include:
- Financial Planning
- Investment Advisory
- Retirement income planning
Look for the Financial Advisors with Reputable Credentials
Not all credentials are created equal. Some organizations create readily available credentials for a fee so sellers can purchase credentials and present themselves as an expert.
To find certified financial planners or advisors, look for someone who holds the CFP (Certified Financial Planner) or PFS (Personal Financial Specialist) designation, or an investment advisor who holds the CFA (Certified Financial Analyst) certification. It is important to note that CFP professionals are bound by the Fiduciary Standard of Care, which means they must always put the interests of their clients ahead of their own.
How Will a Financial Advisor Compensates?
There are numerous ways financial advisors charge for their services, but the most objective and unbiased financial advisors only charge one fee. To hire the best financial advisor like Bit Accounting, you need to know all the ways a potential financial advisor can be rewarded such as charging an assets-based rate, an hourly rate, or participating in commissions.
Understand the difference between a paying consultant and a non-paying consultant. An unpaid consultant may receive other incentives from your company based on the achievement of sales goals or targets.
Ask Questions Related to Finances in Detail
The right questions can help you weed out financial advisors with whom you don’t communicate well. These can include:
- How long have you been in practice?
- How do you charge for your services?
- Can you walk this firm through various retirement projections?
These sorts of questions will help you determine how the financial advisor communicates, as well as their area of expertise and ideal clients.
The key is to ensure you understand the answers, and if you don’t, feel comfortable asking follow-up questions.
Verify Credentials for Complaints
To ensure someone is reputable and has a good track record before hiring them, check a consultant’s references and complaint history by checking their records with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange (SEC ), the CFP Board, or other affiliates to which the Consultant belongs.
If the financial advisor you are investigating is regulated by FINRA, use the BrokerCheck feature on FINRA’s website to see if there are any complaints about him/her. If the adviser is regulated by the SEC, use the search SEC’s investment adviser feature on the SEC’s website to review both the adviser and the company they work for.