Enlisting the help of a financial advisor is often something that we should do. As a whole, we are not all that good at managing our money. Seriously, just take a look at the statistics that show how many Americans are in debt, the country itself and how uneducated most of us are when it comes to our finances. The help of a financial advisor is often needed, but most of us will avoid this if at all possible. Perhaps we are into doing it ourselves, saving the fee that we would pay this person or perhaps we just assume that we can’t hire one because they are all a bunch of crooks and criminals just looking for a way to steal our money and send us to the poorhouse.
Sure, there are financial advisors out there who will take any opportunity to rip us off and steal our money, but that’s why we don’t hire those. What we have to do is learn how to find a financial advisor that will not do that. One that will do what he or she is supposed to do and call it a day. We need one that will ensure that our finances are properly cared for and nurtured, but how do we find one like that? It’s not as difficult as you might assume; we have a few tips that will help you find a financial advisor that’s a lot less likely to rip you off.
Where to start
The most important thing to consider when choosing a financial advisor that won’t rip you off is where to find one that won’t. How do you know that an advisor is trustworthy? The simple and very honest answer is that you honestly have no idea which advisors are trustworthy and which are not. However, that should stop you from looking. The most important resource at your disposal is the National Association of Personal Financial Advisors (NAPFA). Each and every one of the advisors listed on this site is a certified advisor, one that has all the necessary credentials and one that is licensed to do what he or she does.
If you do find a recommendation from a friend, colleague or relative for a financial advisor, check this person out with NAPFA. If you cannot find that advisor through NAPFA, you know immediately to run – not walk – in the other direction. Do not let that deter you from seeking recommendations, though. It’s often the people you are closest to that know of the best advisors and can share their personal stories and tales, making it seem that much more obvious with whom you should choose to work.
Choose several candidates
The most important thing you will do when choosing and advisor is narrow down the field to just a few. You do not want to just pick one and run with it, either. You need to interview them, get comfortable and see what options you have. Choosing one means you will likely miss out on something amazing and lucrative for your financial future, and choosing too many means you will burn yourself out on the process before you ever have a chance to get started. Three is a good number when choosing financial advisors with whom to meet.
The next most important thing to do is set up a meeting with each advisor to speak, learn more about them and their business and present your case. You’ll want to go into the office of your potential future advisor with a few things in mind. One is that you’d like to see the accreditation of the advisor. You also want to discuss their fee structure, how they are paid, how much they earn and any other stipulations associated with their fee schedule. This is imperative.
Here’s an important piece of advice, too. If you plan on providing your financial advisor with more than $100k in assets to manage, you need to ensure that they are registered with the SEC (Securities and Exchange Commission). If not, you will not want to do business with this particular advisor.
Finally, get to know a bit about your advisor. Ask personal questions, talk about family and get to know them on a more personal level. Many people will not do this, but I find that the best way to get to know someone’s character is to learn a bit more about their lives, such as their kids, activities and hobbies. It might seem a bit personal, but you’ll be able to tell a lot about a person based on their simple answers, even if they provide very little detail.
Something else you will want to discuss with potential advisors is their client history. How much success has the firm had, what happens to you if something happens to your advisor? These are things you have to know, and these are things you cannot forget to look into when choosing an advisor.
Once you’ve interviewed and met with each advisor, think about your next step. You might be surprised at your choice. You might not go with the one who charges the least. You might choose to go with the one that made you feel most at home, the one that spoke to you like a human being and not like someone who knows everything about financial advising. You might not like the man with the most success because he speaks to you as if you are an imbecile.
Go with your gut. It’s the only way that you will be able to narrow down your choices and choose a financial advisor with whom you are completely comfortable. It might not be the person that was recommended to you, or the one that you initially thought you’d choose. Go with your gut and allow yourself to feel comfortable with your decision. It’s going to make a difference in your financial future, your comfort and the length of service with this particular person.
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