A financial advisor (also financial adviser) is a finance professional who provide advice to help individuals and corporate organizations reach their financial goals. He researches the markets and recommends a combination of products or investments to meet his client’s immediate and long term financial objectives.
These goals may range from creating more wealth, preserving wealth and protecting it for the future. It could also be to save more, earn more, become debt free or to do all these at reduced cost and minimal risk.
Some financial advisors specialize in specific areas of finance or money management. Their specialization enables them to offer bespoke expertise to their clients. So you could find personal finance specialists, pension planners, specialists in budgeting, debt management, retirement and estate planning.
As a result, there are quite a number of titles used to describe the different specialists within the financial advisory roles. Some of these include: financial planner, estate planner, tax planner, financial counsellor (or coach), investment advisor. More on these later.
There are also generalists who render services in all these areas. It’s like in the medical profession where you have GP’s and specialist surgeons, cardiologists and the rest.
At certain point in your wealth building journey, you certainly will need a financial advisor help you navigate the complexities. However, for so many people it is challenging task to choose a financial advisor. They may not know when they need one or even know how to go about choosing the right one for their needs.
Knowing when you need a financial advisor and also how to go about choosing the right one is what this post is all about.
How to Choose the Right Financial Advisor
How do you go about deciding on a financial adviser to work with when you decide to use one. It’s like choosing the perfect brand of a product which you think might give you the best result for your money. Choosing the right financial advisor can be easy. Unfortunately most people do make mistakes when choosing one.
It’s quite important you know and understand the best process you can take in choosing an advisor for yourself. You literally can’t choose a financial advisor randomly as you’d choose a brand of product.
You need to ask some basic questions which will immensely influence your decision making process. This way, you can be sure of picking the right person.
Now, taking the following steps will help you chose the right adviser.
#1. Be sure you need a financial advisor
Of course literally everyone might want to attest to needing a financial advisor but certainly not everyone do need one.
Therefore the very first step to choosing any advisor for that matter, is knowing if you do need one at all or not. So, ask yourself the first basic question, “Do I need a financial advisor?”
You might be in a stage of your life, where you have made quite lot of money and might be looking forwards to investing, or perhaps you are about retiring and might need some retirement advice. Different circumstances might drive people to seek the help of a financial advisor.
Once you are sure you need a financial advisor, you need to move to the next step in choosing the right one for yourself.
#2. Examine your income stability
This might not go down well with people who think they just need a financial advisor by all means possible. Before hiring, you need to examine your income and financial stability.
The simple question to ask yourself here is, ” Can I afford a financial advisor?”. You need to be really sincere with yourself when asking and answering the above question.
Hiring a financial advisor might be a good idea, but it all boils down to your income. Most financial advisor would certainly not like to work with a client on low or medium income. Or client with literally one source of income.
Financial advisors are quite expensive to afford, hence their services are mostly affordable by CEOs of big companies or literally anyone with a huge and stable source of income.
The good news here is, there are some website online that offer financial advisory services for a relatively low fee. They accept clients of different financial background. If you’re a low income earner looking to get some financial advice, you can register and pay a little fee, to speak to someone online.
#3. Determine what type of adviser your need
You are sure you need a financial advisor, and you can afford one. Next, you need to determine what financial knowledge you need to know. As have earlier pointed out, there are different types of financial advisers offering either specialist or general professional advice.
So you have decide whether you need a specialist advice or the services of a general advisor. Here’s further explanation about some of the specialist advisors available in the financial advisory space.
- Retirement Specialist: Known as Retirement Planning Specialist (RPS), they basically offer help you plan your financial life before and after retirement.
- Wealth Specialist: They help their clients deal with their financial assets with the purpose of multiplying their wealth. They literally deal with clients with huge assets who wants to multiple their wealth.
- Estate Specialist: Estate planning specialist helps his clients with necessary strategies to protect their assets, particularly when they die. A man’s estate goes beyond houses. It comprises of houses, investments, bank balances, physical asset like cars, etc.
- Investment Advisor/Specialist: This professional advisor recommend, choose, construct and manage investment portfolios on behalf of his clients
Estate planning encompasses these assets and sets out how the owner intends to protect and pass them on, on his demise.
#4. Get recommendation from family and friends
This might seem old fashion, but belief me, it’s the best way to get that financial advisor you need. You need to ask friends and families. Or literally anyone who has achieved some success in his personal finance management about who their financial advisor is, who they’d recommend.
We all have different financial situations, it is therefore only wise to get recommendation from someone with similar financial issue as you. This recommendation would go a long way in helping you choose the right financial advisor.
And you also would want to make sure you get as many recommendations as you can. Having different alternative to choose from might be lot of work but it gives you the best.
#5. Do online research
The internet houses enormous amount of information. And for most people, it is the first place to go to search for information. A simple search on Google for example will give you recommendations of financial advisors near you or the leading advisors in your area of needs.
Internet search is a useful starting point. It gives you quite a number of options which you can further explore with due diligence.
#6. Find out about your preferred list of advisor
You need to check the credentials of each of the firm on your list to find which fits your financial situation and is affordable.
There are also free tools online that you can use to check the credibility of financial advisors, such as brokercheck.com or adviserinfo.sec.gov. These tools shows you the background and work experience the financial advisor.
It also shows you some other vital information which you need to know about the financial advisors. This information helps you make the best decision you can. This way you are better equipped at deciding who you want to choose as your financial advisor.
#7. Meet and discuss
Again you need to check your list, after checking their credentials and work experience, you need to meet and discuss with them. This is the best and yea, only way to hire your potential financial advisor. This is the last stage, therefore you need to be as clear as you can.
At this stage you need to ask every possible question there is to ask. Make sure you are both on the same terms.
The first possible question you might want to ask is their work experience with clients. How do they work and what’s their rate like. After getting enough information you need from the advisor. You need to clearly state what it is you want to achieve. Again, you need to state clearly what it is you want to achieve. Once you and your advisor reach a conclusion, you both can get started.
Choosing a financial advisor could look like a difficult task, but with the above step, the process should be quite easy and straight forwards. All you need to do is to go through the above steps and get yourself the right financial advisor you need.