Tips for Choosing a Financial Advisor

Sometimes you may realize that your financial situation is out of control and you need a financial advisor. Luckily, there are resources available that can help your situation. However, before you just randomly pick a financial advisor, there is some advice that you should know when making your financial advising decision.

1. Hire an Advisor Who is a Fiduciary (a Trustee)

It is important that you understand the definition of fiduciary. According to Investopedia, “A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets.” You want to have this person as your financial advisor because it basically ensures that they will be acting in your best interest. When looking for a financial advisor you can use tools online that allow you to search through registered fiduciaries.

2. Don’t be too Eager

You may like the first financial advisor that you meet. However, it is important to remember that this is a very important decision that takes time. Similar to the home buying process it doesn’t happen just overnight. Instead, speak to many financial advisors and if you still like the first one you met with, after enough research then you can go back.

3. Make Sure They Specialize in Your Needs

Not all financial advisors are best for every situation. Some specialize in business management while others specialize in retirement planning. If you are a 25-year-old with no business, then these may not be the right fit for your finances. You want to make sure that you know your potential advisor’s strengths and weaknesses so that you know that they can best assist your situation. Don’t be afraid to ask questions!

4. You Need to Like Their Ideas

Just how every financial advisor has their own strengths and weaknesses, they also have their own strategy. Some are defensive while others are aggressive. You want to make sure you feel comfortable with how they are handling your money. When meeting with them ask them about any concerns you may have and their strategy style. This will give you a glimpse as to whether or not it will be a good fit.

5. Make Sure They are Actually Credited

Random, unqualified individuals cannot become financial advisors. You need to pass examinations in order to be certified. That it why it is so important to ask them about their credentials, licenses, tests, and more.

6. Understand How They Will be Paid

As you should know by now, not every financial advisor is the same. That is why it is important to understand how they will be paid. Some financial advisors opt to charge you a flat rate regardless of your portfolio. Others like to charge a percentage of your managed money. Some may even opt to be paid by commissions. The way that they choose to get paid can be an indicator of their interest. What may be best for them financially if they are commission may not be best for your financial situation.