How to Choose a Financial Advisor

This is a guest post by Evan Fischer

Have no head for money? Or do you have too much of it and you find it suddenly impossible to manage on your own? Even if you are reasonably competent about keeping track of your spending, lack of time or the sudden rise of unexpected situations may require that you look into hiring your very own financial advisor. Here are a few hints you should keep in mind to avoid hiring the wrong person so you can find the proper advisor to fit your needs.

Start with yourself.

Begin by asking yourself essential questions that will help you define the reasons why you think you need help. Why exactly are you thinking of hiring a financial advisor? What are the issues that you need resolved? Comprehensive, retirement, business? Most financial advisors specialize in a certain area of finance, so the more specific you can be, the easier a time you’ll have when you start looking for one.

Network.

Don’t go blindly into your quest. Check with friends or family members who have used a financial advisor in the past. You may even want to ask your accountant if they can refer you to a specialist to deal with whatever issue you may be facing. Following up on a referral will help you more than scrolling through the phonebook or a Google page.

Interviewing.

Before you can begin meeting with your prospective planner, you need to do a bit of research to understand the various designations, certifications, and acronyms you will encounter on your search. Once you feel that you are comfortable with the terminology, and if you have any referrals or candidates that seem promising after you have articulated for yourself the most specific kind of assistance you need, you can begin to interview. Come up with a few questions to ask in advance so that both of you can determine whether this is the right person for the job.

Payment.

How does your potential advisor receive payment? You will want to weigh this consideration carefully, as you want to hire the person who will be looking out for your best interests, not one who is more concerned with making a sale. Are they paid on commission? This method sees that a percentage of your total investment purchase will go toward your advisor. Are they on a flat fee? This means they may charge by the hour or offer a flat fee to put construct your plan. Do they charge an annual fee? This fee calculates a percentage of the assets you invested with them. Make sure that the way your future advisor is paid jibes with your needs.

Your advisor and you.

You want to be comfortable with your financial advisor, so make sure to check the references they provided you, even if they were referred to you by a friend or family member. Keep in mind that you’ll be sharing a lot of private information with this person, so you will need to trust them implicitly. You may also need to consult a tuition agency.