Finding someone to take care of your money can be a stressful task. But you want to take your time to make sure you select the right size. What should you look for when choosing a financial advisor?
Here are some questions to keep in mind as you seek out a counselor to continue planning your retirement.
Am I a full planner?
When you first meet a potential financial advisor, what advice are they offering you? Are they just talking about stocks and bonds? Or do they focus on other aspects of your finances such as social security, taxes, and estate planning?
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A complete financial planner (opens in a new tab) it will help you develop a holistic plan that looks at all aspects of your finances and covers your short- and long-term goals. Consultants who use a holistic approach will take the time to ask you questions about your financial goals, both now and in the future. This could include anything from inheritance planning to charitable donations. You want a counselor who truly understands your hopes for retirement. A holistic plan seeks to optimize all aspects of your finances and how they can work together towards those goals. This type of planning will bring you much more value and help you make complicated financial decisions.
Am I a trustee?
A trustee (opens in a new tab) is legally and ethically obliged to make the best decisions for its customers. They will always put your needs first. This may not be the case for many consultants out there. When you choose a financial advisor, you are looking for someone to help you manage all your finances. You want to be sure you can trust them to do this.
A trustee cannot recommend anything that doesn’t benefit you. If a recommendation could lead to a potential conflict of interest for your advisor, as a trustee, he needs to tell you. This could be something as simple as an advisor who profits more from one investment than another. When I’m a trustee, you know the recommendations they’re giving you come from a place of trust, good faith, and legal and ethical duty.
Am I an independent consultant?
An independent consultant receives a flat fee for recommending their clients and they want to provide you with more than one product. This is very different from consultants who work on commission. They make money based on their sales on behalf of third parties. Be wary of consultants who work on commission. Their recommendations can be based on sales and not on the best products or services for you.
Consultants working for larger companies may be allowed to offer only their company-specific products or services. Working with an independent consultant leaves you open to a lot more options for your money.
Am I a good personality suitable for you?
Your values and goals should align with those of your financial advisor. When you come out of a first meeting, ask yourself if you got anything out of it. Your advisor should be able to simplify complicated financial matters. You may come across someone who checks all of your strategic boxes, but if they don’t suit your personality well, it’s okay to keep looking. This is an important decision and you want to make the right one.
Improve your financial future
A recent poll found that about 38% of Americans (opens in a new tab) currently working with a financial advisor and advisors are the most reliable place to get financial advice.
Planning your financial future is a process that takes years and you don’t want to make a mistake. Make sure you work with the right people who make the best decisions for you and your money.
This article was written and presents the views of our contributor, not the Kiplinger editorial team. You can check the advisor records with the SEC (opens in a new tab) or with FINRA (opens in a new tab).