Traits You Should Look In Your Financial Advisor
Reigning in your finances can be a very rewarding experience. When it comes to amassing a large fortune, most people are deer in the headlights regarding their own finances. So what do you do if you happen to strike it rich in some way?
If your education background lies in business education and finance. If not, then it’s probably best you look at acquiring your own financial advisor. But what’s the method for choosing one? Here is a list of traits shared by every financial advisor worth their salt:
1. They follow the fiduciary standard and put you first
The standard is when “a fiduciary owes a client a duty of loyalty, which means they must act in the best interest of the client.” When it comes to your finances, finding a truly loyal financial advisor is something worth taking your time to do.
There’s also more to financial planners/advisors than simply gaining you a nice return. Sheryl Garrett, Certified Financial Planner says, “A great planner needs to get clients to explore all reasonable opportunities.”
If an advisor is ‘advising’ against how you plan on spending your money, it’s best to listen to them. Remember to ask if a financial advisor follows the fiduciary standard before settling on them.
2. They’re transparent about how they get paid
Financial planners are typically paid by clients they manage, and by firms whose products you are shown by your advisor.
When it comes to how they’re paid, the honest one will not hesitate to let you know how they recoup their money. Some say it’s best if your financial advisor is paid by you, the client, and not some huge conglomerate.
Learn how your financial advisor is paid in order to avoid any conflict of interest that may arise from how they’re compensated. There’s no need to bring that undue burden on yourself.
3. The focus on motivating you
It is always great to have help, especially when you need to outline a financial plan for your life. In addition to helping you create one, financial advisors are also tasked with making sure their clients adhere to the plans they lay out.
While they are there to motivate, you must also remain steadfast in your promise to see the plan through.
“The most important role of the financial advisor is to help a client get the most out of their financial lives – be the most effective catalyst for them, light the fire under the client,” asserts Garrett.
Think of your financial advisor as a sort of drill sergeant. They want to reinforce good financial behavior. Additionally, they want to ensure clients remain calm during massive fluctuations in the market.
4. They’re clear about your relationship
Make certain to lay out clear details with an advisor on how frequently you’ll meet, how much they’ll be paid, and who you’ll be working with.
“The best advisors provide pre-engagement disclosures. They provide a plain-English summary about client relationship, the services and products, and how the client will pay for those products,” claims Micah Hauptman, who serves as financial services counsel at Consumer Federation of America.
Garrett also shares, “Investigate the advisor beforehand online. Invest some time interviewing them. Take your time. Don’t let anybody rush you.”
5. They shape a plan that meets your needs
Nobody looking for a financial advisor has the same exact story. You know your goals and expectations will differ greatly from others, and the right financial advisor can manage that with skill.
“The best advisors aren’t the most brilliant – they’re the most appropriate for you,” states Garrett.
“The best financial advisors have the ability to connect and get to know what clients really need as quickly and efficiently as possible,” says Garrett.
Whether you are saving up for retirement or putting away funds for a child’s college education, an advisor who listens and empathizes will make everything run like clockwork.
Have you reached a point in life where a financial advisor is a necessary expense? Have you had the same one for years or did you change advisors recently? Are there any plans that weren’t infeasible in the past, but can be used now?
According to Investopedia, “the average fee for a professional financial advisor’s services is 1.02% of asset under management annually for an account of one million dollars…”
They also state that although the industry average is 0.99%, that fee can decrease in relation to the size of your account. Regardless of their level of expertise, go with the advisor who charges the percentage you are comfortable with.