It can be a challenge to navigate the world of investments and retirement accounts on your own. A skilled financial advisor can answer your questions, help steer you around pitfalls, and point you toward opportunities you might not otherwise have identified.
But it is essential to choose the right professional for this job. The wrong financial advisor can point you in an unsuitable direction and end up costing you a lot of money. If you find the right fit, however, the ideal advisor can help you save more for retirement with less stress.
Check for licensing.
Your first step is always to look for appropriate credentials and licensing. Don't just request credentials—follow up on them and make sure they are current. Look up the advisor in regulatory databases as well to ensure that they have an up-to-date license. While you are at it, ask for referrals. Call them up and ask for details.
Make sure your advisor will put your interests first.
Your advisor should be a fiduciary. The term “fiduciary” is legally binding, and means that the advisor must put your interests first at all times or face serious legal ramifications.
Another way you can figure out if a financial advisor is likely to work toward your benefit is to look at the way they get paid. Someone who charges by the hour can be a safer choice than someone who earns commissions. There are, of course, exceptions. In all cases, you must carefully vet the advisor before making your decision.
Watch out for high fees and impossible guarantees.
Financial advisors do not work for free, and you should expect to pay an hour rate or fees for their services. But there is no reason that you should be charged exorbitant fees. And all fees should certainly be listed transparently in advance and be easy to understand.
Another red flag to avoid is unrealistic guarantees. Nobody can guarantee that you will profit from their financial advice. They should always make it clear that their past track record does not guarantee future results. Anyone who attempts to promise the impossible (i.e. claiming to know the future) is out to scam you.
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Pick someone you can afford.
There is a wide range of costs for financial advisors. Run some calculations with your budget and figure out what you can afford to pay a financial advisor. If you are on a tight budget, you may find that those charging hourly rates are more affordable to you than those who charge fees.
Choose someone experienced with your individual needs.
As an individual investor, you have a unique set of personal circumstances. The needs of, say, a high earning employee will be vastly different from the needs of, for instance, a middle income self-employed individual. The right financial advisor will be used to dealing with circumstances which are similar to yours and will have a solid grasp of your obstacles and goals.
Make sure your personalities are a match and that you are getting the transparency, patience and respect you deserve.
Finally, there are intangible factors to consider as well when selecting a financial advisor. You should have a good rapport with the advisor, and feel comfortable working with that person. If the right level of trust and respect do not seem to be present in your initial conversation with a financial adviser, you should probably move on and evaluate another.
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While there are many experienced financial advisors out there with solid track records, it can be a challenge to hunt for the right one on your own. Want to save time and effort? Just fill out the short form below, and we will match you to a financial advisor that is ideally suited to your individual needs and goals.