Financial stability is an essential aspect in life that only a few people prioritize. While most of us may be at our prime and earning income through work or business, not all have a clear grasp of what to do during financial emergencies or the financial goals to set for the future. It’s no wonder why even people with high-paying jobs still fall into huge debts or encounter financial problems at some point in their lives. This is where a financial advisor comes in to help you make wise financial decisions and protect your money from unproductive spending.
There are various ways of hiring a financial advisor, and some of them will be shared here.
Determine the Service You Need
Financial advisers handle a wide range of functions and specializations other than offering financial and investment advice. They specialize in financial planning, savings, ISAs, pensions, inheritance tax planning, and other matters related to finances. To find which service you need from a financial adviser, you can find more info here to align your financial priorities with an adviser’s specialization. It is mutually beneficial for both clients and their financial advisers if their needs and areas of expertise are respectively aligned. It will be easier for you to discuss your financial goals, while your adviser would also find it more convenient to offer solutions that can help achieve those goals.
Also, determining your financial needs helps narrow your search for the right financial advisor candidates. You are more likely to make an excellent selection if you lower the number of candidates in this growing industry.
Check if the Advisor is Fiduciary
Before you get into the hiring process, this is another factor that is worth including. Ethics is an indispensable element when it comes to entrusting your money to some. A fiduciary refers to an entity or individual who manages financial assets and resources for another person or client. Knowing that the advisor you are selecting is fiduciary will help put your mind at ease because they pledge to put their client’s needs and best interests ahead of their own.
Look for certified financial planners (CFPs) or similar certifications from your advisor candidates while refining your search. Regulatory bodies like the Financial Industry Regulatory Authority (FINRA) have databases that you can check to verify further if your advisor is fiduciary and if they have disclosures (which may include complaints, disputes, disciplinary actions, etc.) on their records. Also, referrals and client reviews can give you an idea of how dedicated your potential financial advisor is to their fiduciary pledge.
Consider How the Advisor Makes Money
Another vital piece of information to take into account is how you will be paying for the services that your financial advisor will provide. Typically, there are three common payment arrangements that advisors earn: commission-based, fee-based or flat rate, and commission and fee-based hybrid. Another payment arrangement you might also consider is to let them collect a percentage of your assets that they are managing.
Advisors who sell financial products earn through commission-based arrangement, so make sure to select ethical advisors who will sell bad products to you for the sake of increasing their sales figures. Some advisers provide financial advice services and sell financial products due to their brokerage company affiliations. Thus, they may provide their services for a fee and sell financial products from which they earn commissions. Fee-based or flat-rate advisors are often preferred by clients because of their straightforward compensation arrangement. They also are more likely to put your best interests as they are more bound to fiduciary duties.
Knowing the compensation structure of your possible financial advisor candidates will help you prepare better for paying their services. The bottom line here is choosing the payment structure you are most comfortable with.
Screen Financial Advisor Resumes and Profiles
After running some preliminary checks on a financial advisor’s background, you will need to examine how they present themselves through the resumes or profiles they create. At this stage, it will be wise to examine their experience and track record in their area of specialization. While sufficient educational background is a given in most cases, you should not undervalue some soft skills that other candidates possess, such as diligence, adaptability, and having a growth mindset.
Interviewing your potential financial advisor by giving them a phone call will help you determine if they have effective communication skills. How they respond to your questions, carry the conversation, and how easily you understand what they say is crucial in your future dealings with them. Effective communication is vital in working your way to achieving your financial goals.
Hiring a financial advisor should not be a difficult task if you know what you need and how to fine-tune your search. Screening potential candidates will help you arrive with a smart selection among the growing number of outstanding advisors. Thus, think of future-proofing your hard-earned money as early as now and select the best advisor who can help you achieve financial security.