A good financial advisor can help you make sound investment choices, plan for retirement and manage your finances. But finding the right one can be challenging. Here are some tips to help you find a financial advisor who is right for you.
Determine What Type of Advice You Need
Do you need help with investments, retirement planning, budgeting or debt management? Knowing what type of advice you need will help you narrow down your search for a financial advisor.
Consider Your Stage of Life
Your financial needs and goals will change as you move through different stages in life. If you’re just starting out, you may need help with creating a budget and saving for a down payment on a home. If you’re nearing retirement, you may need help with creating a retirement income plan.
Consider Your Investment Style
Are you a hands-off investor or do you like to be actively involved in your investments? Some financial advisors will take a more hands-on approach, while others will give you more control over your investment decisions.
Ask For Referrals
Talk to family and friends who have similar financial goals as you. Ask them if they’ve worked with a financial advisor and if they would recommend that person. You can also check with professional organizations such as the Financial Planning Association or the National Association of Personal Financial Advisors for referrals.
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Interview Several Financial Advisors
Once you’ve identified a few candidates, set up appointments for initial consultations. These consultations are usually free and give you a chance to get to know the financial advisor and see if their services are right for you.
Check Credentials and References
Make sure the financial advisor you’re considering is properly credentialed and registered with the SEC or state securities regulator. You can also request references from past clients to get a sense of the quality of service provided.
Ask About Fees
Financial advisors typically charge either an hourly rate, a flat fee, or a commission on the products they sell. Be sure to ask about all fees upfront so there are no surprises down the road.
Consider Working with a Fiduciary
A fiduciary is a financial professional who is legally bound to act in your best interests. If you’re working with a financial advisor, you may want to consider finding one who is a fiduciary.
Get Everything in Writing
Before you work with a financial advisor, be sure to get all agreements in writing. This will help protect you if there are any misunderstandings down the road.
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Review Your Progress Regularly
Once you’ve started working with a financial advisor, be sure to review your progress on a regular basis. This will help ensure that your goals are on track and that your finances are where they should be.
My financial advisor strongly encourages me to have several conversations a year with him, insisting that the process works best when I’m fully engaged as well.
Your financial advisor will be one of the most important professionals in your life! Make sure you take the time to find someone who’s in your corner and knows what they’re doing!
