5 Tips for Finding a Financial Advisor
One of the best ways to manage your finances and plan for the future is to hire a financial advisor, but how do you know who to trust? Who are the honest guys and who is planning on being the next Bernie Madoff? Here are some tips to find the right financial advisor for you:
Run a background check.
The financial advisor you hire will be trusted to manage your hard-earned money, so you better do a thorough background check before allowing them access to your life’s savings. Do a quick Google search to find out if there are any complaints or news articles about scams or lawsuits involving the financial advisor in question. Always check with the Security Exchange Commission and Financial Industry Regulatory Authority for more information. Finally, don’t be afraid to ask the financial advisor for a list of references who he or she has worked with in the past.
Ask yourself questions.
Figure out exactly what you’re looking for before you get into the market of hiring a financial advisor. Do you need someone who can evaluate your finances from top to bottom and create and manage a retirement plan for you and your spouse? You’re probably looking for a Certified Financial Planner. If you’re more in the market for someone who can give you sound investing advice, a large investment firm that offers portfolio advisory services seems like a better fit.
Avoid solicitations.
Skilled, professional financial advisors will not reach out to you asking for your personal information or your business through an unsolicited phone call or email. If one approaches you in this manner, hang up, or don’t respond to the email, and never give out any personal information to someone you don’t know and trust.
Never go with the guarantee.
Many untrustworthy financial advisors will tell potential new clients that they can guarantee a certain rate of return, or guarantee a market-beating performance. Hearing this during a consultation should be a sign for you to turn and run. Financial advisors cannot guarantee any type of performance, especially a market-beating one, so don’t trust someone who makes it seem so simple.
Find out how they are paid.
Considering signing a financial advisor? Find out in writing how they make money off of helping you. There are different arrangements depending on the financial advisor. Some will charge a commission or a combination of fees and commissions. A small percentage will charge a flat rate or hourly fee, so no matter what type of payment plan is discussed, get it in writing so there are no issues down the road.
Sources:
http://news.investors.com/investing/122815-786871-how-to-shop-for-a-financial-advisor.htm
http://guides.wsj.com/personal-finance/managing-your-money/how-to-choose-a-financial-planner/
http://www.forbes.com/sites/nextavenue/2015/04/03/4-tips-for-finding-the-right-financial-adviser/
