Thinking of hiring a financial advisor? If so, you’re not alone. In fact, many Americans today are turning to professional advisors for help with their personal finances. A recent study found that nearly 60% of adults in the U.S. are willing to spend $200 or more on financial advice from an unbiased third party—an increase of 20% from the last time this poll was taken in 2011. That’s good news! Financial advisors can be an invaluable resource for your money and offer expert insight that you might not have on your own. But how do you know if you need one? And what should you look for when hiring one? This article will answer all of those questions and more!
Financial advisors can help you plan for the future and make sure that your assets are appropriately allocated. They can help you with investment selection (stocks, bonds, etc.), asset diversification, and a wide variety of other financial topics that might be outside of your expertise. As mentioned above, financial advisors are unbiased and can offer advice that isn’t influenced by sales incentives. They are held to a fiduciary standard and are legally obligated to act in your best interests. So, they’re not going to try to sell you products that make them the most money—they’ll only recommend products that are in your best interest. Financial advisors can also help you deal with financial emergencies and plan for retirement. And the best part, you don’t even have to break the bank to hire one. Many financial advisors offer their services on a fee-for-service basis, which means that they charge you a fee based on what you have to invest. And many will work with your budget and help you find a solution that fits within your price range.
If you’re not sure whether you should hire a financial advisor, you can use these signs as a guide. - You’re a first-time investor. If you’ve never invested before, you’re probably better off hiring a financial advisor than trying to navigate the process on your own. Investing can be a complicated process, and it can be challenging to navigate those complexities if you don’t have experience.
- You have a complicated financial situation. If you have a complicated financial situation, such as a high level of debt, a complicated portfolio, or a high net worth, a financial advisor can help you navigate those complexities and offer guidance on how to improve your situation.
- You’re not sure how much you should be investing. If you have a high net worth, you may have a substantial amount of money in cash. But sitting on cash may not be the best move for you. A financial advisor can help you determine the level of investment that is right for you.
- You want a second opinion. If you’re not sure about a decision, a financial advisor can provide a second opinion on the matter. This can be especially helpful if you’re dealing with complex situations that require a financial expert to navigate.
- You want help planning for retirement. Whether you’re still years away from retirement or you’re already retired and want to make sure your money lasts, you’ll want to talk with a financial advisor about how to make your money last as long as possible.
- You want help with financial emergencies. Although you hope it never happens, at some point in your life you may face a financial emergency. A financial advisor can help you create a plan that can help you deal with these unexpected events.
As you can see, there are many reasons to hire a financial advisor, but that doesn’t mean that every financial advisor is right for you. In fact, it’s important to take the time to find the right financial advisor for your situation. To do this, you’ll want to find an advisor who meets the following requirements.
- Find someone who you trust. At the end of the day, you’re entrusting this person with your money. You need to be comfortable with whomever you decide to hire. You need to be sure that you can trust them with your financial future.
- Someone who is qualified. Make sure that the financial advisor you choose is qualified to give you the help that you need. Historically, financial advisors have been regulated by the Securities and Exchange Commission (SEC), but as of 2016, the fiduciary standard became law. This means that all financial advisors, whether they work at a brokerage firm or have their own company, must act in their clients’ best interests and follow a fiduciary standard of care.
- Someone who offers a wide range of services. While some financial advisors specialize in a certain area, others offer a wide range of services. You want to find someone who can help you with all of your financial needs, from retirement planning to dealing with financial emergencies.
- Someone who works with your budget. While you may want to hire a financial advisor who specializes in a certain field, you also need to find someone who works with your budget. You don’t want to hire an expensive financial advisor who charges you thousands of dollars a year just to help you create a retirement plan.
Now that you know what to look for in a financial advisor, it’s time to start your search. There are a few ways to go about this: - Ask Friends and Family Members for Recommendations - If you know anyone who has used a financial advisor in the past, ask them who they would recommend.
- Check Out Online Reviews - Online reviews are a great place to find information about different financial advisors. Just be sure to read several reviews and take them with a grain of salt. Not all reviews are accurate, and some of them might be biased.
- Check to See If They’re Registered - One way to make sure that the financial advisor you’re considering is legitimate is to make sure that they’re registered. To do this, go to the SEC website and look for the Investment Adviser Public Disclosure (IAPD) link.
As we discussed above, there are several things that you should look for in a financial advisor. But what are the most important things to look for? Here are the three most important things to look for in a financial advisor.
- Experience - This is an obvious one, but you’ll want to make sure that the financial advisor you choose has the experience necessary to help you with your financial situation. If you’re dealing with a high net worth and have a complex financial situation, you’ll want to find someone who has plenty of experience managing large portfolios and dealing with complicated situations.
- Education - While experience is important, you also want to make sure that the financial advisor you hire has a strong educational background. Many financial advisors have a degree in finance, economics, or a related field.
- Honesty - The most important thing to look for in a financial advisor is honesty. You want to make sure that the financial advisor is working for you and is giving you honest and accurate advice. You don’t want anyone to try to push you into a particular investment or product.
There are two main types of financial advisors: Commission-Based and Fee-Based Advisors. What type of financial advisor you hire will depend on your budget and what type of services you need. Let’s take a closer look at each of these types of advisors. - Commission-Based Advisors - Many financial advisors are commissioned-based. This means that they earn a percentage of the sales that they generate for their companies. - Fee-Based Advisors - This type of advisor charges a fee based on what you have to invest. For example, if you have $100,000 to invest, they may charge you a flat fee of $5,000, which is 5% of your total investment.
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