Introduction
When it is time for you to choose a wealth planner, it can be difficult to know where to start. This blog post talks about the different factors that should be considered before choosing your advisor and the benefits of selecting an advisor who is a fiduciary. It also provides links to additional resources so you can learn more.
- Fees and costs
The cost of serving as a fiduciary is higher than serving as a non-fiduciary. Before choosing your financial advisor, make sure you understand how the advisor is paid and any associated fees you will incur. If you are considering a financial advisor who charges commissions or other forms of compensation that may be affected by the products they sell, find out whether they will recommend only those that are in your best interest.
- Investment philosophy
The advisor should share your investment philosophy. With a financial advisor, you are partnering with the person to help you reach your financial goals. The investment approach of the advisor should be consistent with the overall direction of your financial plan and align with your risk tolerance. Your risk tolerance is unique to you, so it is important that your investment approach also considers your individual circumstances and objectives.
3.Experience
An important factor in choosing the right person to advise you on investing and planning for your financial future is experience. The advisor should have the time, knowledge, skills and resources to help you. An experienced advisor will also help you avoid costly mistakes.
- Reputation
An important factor in choosing a wealth planner is recognizing when an advisor’s reputation is aligned with yours. Reputation and character are as important as experience and skill when evaluating a financial planner or wealth manager. Consider asking others who have worked with the advisor and reviewing the advisor’s peer reviews.
- Resources
It is important that the advisor you choose has access to the resources needed to assist you, such as sophisticated investment tools such as investment managers, portfolio software and other financial products. A good wealth planner should also be able to work with your financial institution on a plan that includes services you cannot use at that institution, like financial advisory services offered by your bank or brokerage firm.
- License or certification
It is important that the advisor you choose has a license or certification to be a fiduciary. The level of training and experience varies, but most advisors have completed courses and have served as an advisor for at least two years before being certified.
A good advisor will not only provide investment advice, but also address other financial planning issues you may have, such as estate planning.
- Recommendations
An advisor who is a fiduciary should be able to provide you with the names of other people who can also provide you with advice. This is an important factor in selecting your financial planner.
Conclusions
If you have questions about the investment-related recommendations made to you, ask your advisor to explain why he or she is making that recommendation. If you are uncertain why a certain recommendation is being made, ask questions until you understand. Also, make sure that your advisor has read and understands your financial situation and objectives before offering advice so that the advice given is in line with those objectives.