Before you hire a financial advisor, there are pieces of information you might want to find out. But let’s take a quick glance at two crucial things you should know about a financial advisor.
Who is a financial advisor, and what do they do?
Financial advisors are specially trained people who have in-depth knowledge of fiscal/monetary management. They find you better ways to spend your money without actually wasting it in cases of investment, or a good savings plan that will guarantee a good retirement, without it affecting your present expenses. To find out more about the role of a financial advisor, check this out (hyperlink to the previous article).
What Important Questions Should you Ask your Financial Advisor?
Now, we know who a financial advisor is and the role they occupy in the world, you shouldn’t hire one without knowing these things.
- Which fee payment system does the financial advisor work with?
There are two common types of fee payment system associated with the financial advisor world; the fee-only and fee-based payment method. The fee-only involves the financial advisor charging a particular amount based on the amount of asset he is in charge of. Fee-based, on the other hand, includes fee-only fees plus additional costs that may be incurred during the contract. These other charges can be procured from the selling of financial products. Make sure there is a clear understanding between you and the financial advisor about the payment method. The fee-only is hugely advised as it allows more openness in the area of payment, and you don’t have to worry about future charges.
- What is the financial advisor area of specialization?
You should find out which field the financial advisor field specializes in. A financial advisor can serve as a retirement planner, investment planner, tax planner, debt planner, and others. Specialization allows for more efficiency in that field, and you can be sure to receive more help if you hire a financial advisor that specializes in the area where you need help. You don’t want to hire a tax advisor to plan your retirement plan, you might not have the best service in this case.
- Does the financial advisor work fiduciary or non-fiduciary system?
Financial advisors that work with the fiduciary system works in the best interest of their clients. They consider all conditions, present, or future before they recommend a suitable financial plan for their clients. A financial advisor not bound by the fiducial codes works mainly as an advisor without putting much into consideration. For instance, if you are to start a business of selling waffles, a fiducial advisor considers all factors that may affect the business, such as location, competitors, and alternatives. A non-fiducial financial, on the other hand, simply consider if the money at hand can start the intended business and suggest a suitable financial plan for optimization of the business based on this factor. You should have a clarity about this before going into a relationship with a financial advisor.
- How much accessibility will you get?
You need to know how accessible your financial advisor will be before you go into an agreement. Some financial advisors are always available to discuss and analyze financial strategies that are being considered with their clients while others are only available for a short time. You don’t want to hire the service of a financial advisor, then later complain about how inaccessible he is.
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