The first part of the article focused on what a financial adviser can do for you and also how to recognise when the time has come to say goodbye to your current adviser. This time we will look at a few recommendations for selecting a suitable personal finance specialist.
How to choose a suitable financial adviser?
Find out if your financial adviser is a mentee. So-called fiduciaries are persons who, on the basis of a contractual arrangement, have accepted an ownership mandate to manage someone else's property. They are registered with either the state regulator or the Securities and Exchange Commission (SEC). It is their responsibility to act in your best interests and inform you in advance of any potential conflict of interest.
However, you need to be aware of the fact that not every investment adviser is also a trustee, and that brokers, traders and insurance agents are not required to work in your best interests. You can ask your financial adviser for their registration number and check this on the NAPFA (National Association of Personal Financial Advisers) website.
In addition to the fiduciary standard, find out if your financial adviser has any specific certifications, such as CFP (Certified Financial Professionals), ChFC (Chartered Financial Consultant) or AIF (Accredited Investment Fiduciary). This will help you understand their qualifications and whether they are suitable for your financial requirements.
Ask how your financial adviser is paid. This can have a huge impact on the composition of your portfolio. Advisers work with different fee structures: some take fees only, while others may receive a commission for recommending a specific product. There are other fee models, such as asset management fees or success fees (hedge funds).
Although there are no rules defining ideal reward models, it is important that your financial adviser lists them - either voluntarily or upon request.
Verify credentials and customer feedback. Checking your financial adviser's information is only the first step. It is important to find out if there are any possible complaints concerning your adviser, which you can only do by going to the SEC, Board CFP® website, or by reviewing your adviser's records with the FINRA (Financial Industry Regulatory Authority). If you find a complaint, ask your adviser about it. More complaints should serve as a warning: "Hands off".
In addition to checking official records, ask your financial adviser for references. Any good adviser should be happy to share these. Talk to previous or current clients and get detailed feedback. You can find out more about your financial adviser online.
A good financial adviser can improve your life and bring you a financial reward. It is essential to do thorough research before hiring a financial expert. Even if you have someone taking care of your finances, it is customary to monitor your portfolio. A little caution and routine checks will go a long way towards securing your financial future.
-bb-