Financial advisors can help you plan for things like retirement, or saving for your child’s college education, and finding a good financial advisor can mean the difference between whether or not those goals are achieved. There are many rules of thumb when it comes to selecting a good financial advisor, but here are some key ones:
1. Education/Certification – make sure your financial advisor has a sufficient amount of education and experience. Each certification that is listed after an advisor’s name speaks to a certain amount of training they have gone through. To better understand what each designation means, simply do a quick Google search. The main ones you will likely encounter, though, are: CFP (Certified Financial Planner), CFA (Certified Financial Analyst) and CFS (Certified Fund Specialist).
2. Understanding Fees– there are two ways financial advisors make their money: commissions (from investment providers) and payment from their clients. There is obviously potential for a conflict of interest when it comes to commissions, but they are also the primary source of income for most financial advisors. The important thing is that you recognize how your financial advisor makes their money so you can spot any potential issues.
3. Relationship – ideally you want to find a financial advisor that you are comfortable with. This person is going to become an important part of your life, and you want to make sure it is someone you feel you can trust and feel good about.
4. Interview – probably the most important part of your search is going to be the interview. The interview is where you talk about investment philosophy, how they operate, and so on. This is also where you get a chance to really meet the advisor and find out if they are someone you can see yourself working with for years to come. Don’t fall for the trap of settling for the first advisor you meet with, though. Even if the first one is great, make sure to interview at least three different financial advisors before you decide on one. Especially if you have never worked with a financial advisor before, this step is incredible important. Each interview will give you an increasing level of confidence, and will help you learn more about what you really want/need from your financial advisor.
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