It’s important to choose the right financial advisor who can help you meet all of your financial goals. Before you get started on your search, you should have a good idea of exactly what your financial goals are. What are you hoping to achieve with the financial advisor’s help? What sort of help are you looking for from a financial advisor?
Once you know what you’re looking for, it’s time to search for a financial advisor. When you meet with an advisor for the first time, there are some questions you can ask them to make sure that they’re the right one for you.
How Does the Advisor Get Paid?
It’s important to look for an advisor whose payment comes only from fees. It’s common for an advisor to charge a fee based on a percentage (typically 1%) of the assets they’re managing on your behalf,an hourly fee, or a flat fee. Any of these types of fees are fine.
However, you want to avoid hiring a financial advisor who makes money based on commissions. These commissions come from selling products. This means that the advisor may be pushing you to make a purchase that isn’t necessarily in your best interest so that they can get that commission on the sale.
What Exactly Will the Costs Entail?
Before signing on with a financial advisor, it’s essential to know exactly what you will be expected to pay. A flat fee or an hourly fee can be fairly straight forward. However, if the fee is 1% of your total investments, that could end up being a lot of money in the long run. While it may not seem like a lot all at once, such a fee could really eat into your retirement savings without you even realizing it.
Is the Financial Advisor a Fiduciary?
A fiduciary is a financial advisor who is bound by fiduciary responsibility to ensure that they advise only the best possible course of action for their clients. Financial advisors who are not fiduciaries only have to make recommendations that are suitable for your needs, even if there’s a better option out there. A fiduciary will always recommend the best possible choice for their clients.
What Is the Advisor’s Investment Philosophy?
It’s vital that you’re able to trust your financial advisor. This means that you need to work with someone who has the same philosophy when it comes to your investments that you do. An advisor with the same investment philosophy as you will help you feel more confident in your investments and trust the advice of your financial advisor more. This is especially important during an economic downturn when you might be tempted to sell. An advisor you trust may be able to convince you to keep your investments and wait until things turn around.
How Will the Advisor Allocate Your Assets?
Before choosing a financial advisor, check what kind of asset allocation the advisor uses. Making sure your investment portfolio is properly diversified is the key to protecting your investments from the volatility of the markets. Any financial advisor you decide to work with should have a plan for diversifying your portfolio that includes both domestic and international stocks from a variety of different-sized companies.
