The following is a guest post. Enjoy!
You can make a significant difference to your financial success by making use of the services of a good, independent financial advisor. Financial advisors help you make decisions that are tailored to your circumstances.
Perhaps, like most people, you feel you don’t need professional help. This might be fine in the short term but could severely impact your success further down the line. All financial advisors, however, like all professionals offering services, are not equal.
Here is a list of questions that you can ask yourself when reviewing your current or prospective financial advisor:
Are they independent?
Financial planners are either tied agents or independent agents. Tied agents work for a particular product provider(an example of this would be a retirement annuity offered by a certain company) and may be incentivized to sell certain products. Independent agents earn no commission off of products they sell and do not work for a particular provider.
Independent advisors tend to be more objective and use their experience to create a path to your financial goals. They help you make sense of all the products that are available to you and can help you pick ones that best suit your financial needs and circumstances.
What are their qualifications?
All financial advisors are required by law to be licensed by the Financial Services Board or FSB. In order to get the license, an advisor needs to pass the regulatory exams and fulfill the Fit and Proper requirements defined by the FSB. These requirements include honesty, competency, and integrity. All financial advisors need to prove to the FSB, on a continuous basis, that they are maintaining and developing their professional competency.
In addition to these basics, you should inquire about the advisor’s academic or other credentials. Reading the disclosure document provided to you will give you an idea of all the products the financial advisor is licensed to recommend and advise on.
What is the fee structure?
Full disclosure and transparency are very important. It is best to that your financial advisor explains to you exactly what kind of fees you will need to pay and how they would work.
Fees are generally charged as a percentage of the value of an investment. There could be initial and ongoing fees, thus it is important to identify the costs. Some advisors use a different fee structure. They charge directly for advice provided, usually at an hourly rate. Any fees should not be charged or paid without an agreement upfront.
How can they help you grow your wealth?
Good advisors take the time to understand your needs and help to put a plan in place that reflects your financial goals and risk appetite. They can help you invest with more discipline and can offer rational guidance before your emotions lead you astray.
Investors often buy and sell investments or switch between products at the wrong time due to an emotional reaction to the market. This can potentially destroy the value of your investment. A financial advisor helps you to remain focused on your goals. They play a huge role in helping you grow your wealth. By growing and nurturing your relationship with a financial advisor you can rest assured that your investments are adjusted to your needs rather than your emotions.
Where can you find a financial advisor?
Trust is very important in this relationship, therefore a good starting point for your search for an advisor would be to get a recommendation from someone whose opinion and judgment you can trust.
