How to Choose a Financial Adviser
In good economic times and in bad a financial adviser can help you prepare for a comfortable retirement. A qualified professional can help you make sense of the myriad of investment vehicles available to seniors. That is why it is important that you choose a skillful financial planner. While it is important that you find someone you are comfortable with there are also very specific questions or issues your adviser should address.
Qualifications
Frightening, but anyone can say they are a financial planner. You want to make certain your advisor has met the education standards to carry that title. If you want to double check your advisor’s credentials you can perform a ‘Broker Check’ on the Financial Industry Regulatory Authority’s website (http://www.finra.org).
- CFP- Certified Financial Planner
- ChFC- Chartered Financial Consultant
- CAP-PFS- Certified Public Accountant and Personal Financial Specialist
- CRPC- Chartered Retirement Planning Counselor
Types of Investments and Financial Services Offered
Just because someone has the credentials necessary to be a financial adviser does not mean they are licensed to sell every investment on the market. For example, financial planner are not authorized to sell securities like stocks or mutual funds without the proper licenses. In fact, advisers may not give advice on these products unless they are registered with state and federal authorities. Selling insurance is another facet that requires specific certification.
Get it in Writing
With so much to think about and consider you should expect your adviser to put their recommendations in an orderly, written format. Be wary of an adviser that doesn’t automatically do this for you.
Compensation
One of the first things a financial adviser should tell you how they receive compensation. Planners are normally paid in one of two ways:
- Commission – This is the most common, and often preferred, way for a financial adviser to be compensated. In this scenario, the planner receives a percentage of the money you invest. A conflict of interest can occur when different investment companies offer planners different commission levels. A good adviser will help you find the right investment rather than trying to steer you into something that only lines their pockets.
- Flat Fees – Some investors prefer a flat fee structure. Flat fee advisers will either charge an hourly rate or a one-time fee in return for a comprehensive financial plan. This may cost you more money up front, but it takes away the conflict of interest.
Referrals
Yes, you can ask a financial adviser for referrals, but asking your friends and family for their advice may be more productive. If you have friends or family with financial skills that you admire then you can talk to them about their money adviser. Word of mouth is how some of the best financial planners find their clients.
