At times, taking control of your finances can benefit from a little outside help. A financial advisor can be a valuable asset, but it can be overwhelming to find the right person to suit your needs. Simplify the process by taking it step-by-step to ensure you find a competent professional who can help you accomplish your goals.
Look at types
All financial advisors are not the same. They are categorized based on how they’re paid, with the three being fee-only, fee-based, or commission based.
• Commission–based: Registered representatives, insurance agents, and brokers fall into this category and make money on what they sell. Be wary of a potential conflict of interest since they are paid for sales.
• Fee-based: These tend to be associated with an agent or broker. They have a license to sell insurance or investments at a commission, but the process can be confusing because the planning advice is offered for a fee. The difference between the two is that these advisers receive both paid commissions and sell products.
• Fee-only: Stick with this type of advisor to create a complete financial plan. These individuals work for your interests and receive either a flat rate or hourly fee.
How much help?
Consider an hourly consultation if you have a few questions to ask an advisor without needing a complete workup. You can get the information you need quickly. A comprehensive plan is ideal if you’re trying to plan ahead for further in the future and want a complete foundation to build on. You could also look to find someone to help manage your assets on a long-term basis.
Picking an Advisor
Select an adviser that is certified by an organization in the industry such as the CFA, CPA, CFP, or ChFC. Check to verify that there aren’t any ethical or legal issues with the individual and how long they’ve been practicing. Someone new to the field might not have the experience you’re looking for. You also want to find someone that you feel comfortable with. If you don’t feel comfortable with the person, you won’t want to put such a large part of your life in their hands.
Finding the Adivsor
Check with the National Association of Personal Financial Investors to find a reputable advisor in your area. You can also consult with your friends, professionals you know, or your CPA and ask for a recommendation on who they use.