Tuesday , 20 February 2024

6 Ways To Choose the Right Financial Advisor For YOU

[A financial advisor…can realize enhanced returns for you over the years] and help you feel more at ease about their finances, but…only 29% of Americans…work with a financial advisor…[Research shows that] an advisor-managed portfolio…[outperforms] a self-managed portfolio realizing an 8% annualized growth over a 25-year period, [on average,] compared to 5% from a self-managed portfolio. [Below are 6 ways to go about choosing the right one for YOU].

This post by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) excerpt from an article from SmartAsset for the sake of clarity and brevity to provide you with a fast and easy read. Please note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
  1. Always hire an advisor who is a fiduciary (i.e. an individual who is ethically bound to act in another person’s best interest) as this obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy….
  2. Shop around. While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.
  3. Don’t choose an advisor with the wrong specialty. Some financial advisors specialize in retirement planning, others are best for business owners or those with a high net worth while some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses – before signing the dotted line.
  4. Don’t pick an advisor with an incompatible strategy. Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.
  5. Always ask about credentials…Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner.
  6. Understand how they are paid. Some advisors are “fee only” and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire…[him/her].

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