Many people need help managing their money but are unsure where to turn. Should they work with an estate planner, a tax professional, or a financial advisor?
Many people hesitate to choose a financial advisor because they worry about sharing sensitive information with strangers. They might feel that a financial advisor is only for wealthy investors and that they have little funds for this purpose.
A financial advisor can help anyone manage their money, regardless of how much or little it is. With the help of this advisor, a person can grow their wealth and retain what they currently have. However, they must know how to choose the right person for this role. What should they look for when making this choice?
Why is an Advisor Needed?
The first step in choosing which professional to work with is determining why an advisor is needed. One person may need investment advice, while another may be looking into how to pay off debt and create a budget they can stick with. In addition, the person needs to determine how often they expect to work with this professional. A person looking for help investing may want to meet with the advisor regularly, while someone who wants help creating a budget may only need one or two visits.
Financial Advisor Options
Many financial advisors, including robo advisors, look at a person’s goals and risk tolerance and create an automated investment process. These advisers are less expensive. However, some men and women want more hands-on advice. They may turn to a fee-only advisor who charges them hourly or annually. These men and women do not earn commissions when they sell investment products. Fee-based advisors offer similar services but make a commission when they sell an investment product, which can lead to conflicts of interest. Wealth managers work with individuals with high net worth. They offer a complete range of services, including tax planning and investment management. Individuals should look for a fiduciary who must put the client’s interests before their own.
Credentials
When comparing financial advisors, ask about their professional credentials. Designations to look for include chartered financial analyst or certified financial planner. These men and women serve as fiduciaries, so the client’s needs always come first. Furthermore, these individuals have passed a comprehensive exam that shows they are familiar with the different elements of financial planning. They must also abide by a code of ethics. Never take a person’s word when they say they have specific credentials. Verify these credentials before working with them.
Fees
People turn to financial advisors for help managing their money. They want to avoid handing over large sums of this money to the advisor. Financial advisors have different fee structures, so a person must learn what they will be charged before working with a professional. Individuals may pay by the hour, a flat rate, or an annual rate based on a percentage of the assets they have the firm managing. Some financial advisors earn commissions when they sell products. Working with a financial advisor who charges nothing for their services may be tempting. However, clients may not get the best advice.
Always research financial advisors to select a reputable person to manage your funds. Friends and family may be able to recommend somebody or a person might choose to use an online tool to find the right professional. National organizations are another great resource when looking for a financial advisor. Use all available tools to select the right individual and watch your money grow.
