A financial adviser, is a professional who renders financial services to individuals, businesses and governments. This can involve investment advice, which may include pension planning, and or advice on life insurance and other insurances such as income protection insurance, critical illness insurance and advice on mortgages. Everywhere you go you will get different financial advice and advice that suits some will not necessarily suit others. You need to find what works best for you and go from there. With the recent recession it has taught us one thing and that is that you do need a financial plan, even a basic plan that helps you to save more and spend less, particularly on credit.
But how do you know what financial advice really is good advice?
Ideally, the financial advisor helps the client maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation. Financial advisors use stock, bonds, mutual funds, real estate investment trusts (REITs), options, futures, notes, and insurance products to meet the needs of their clients.
A good financial adviser can help you identify goals, set an overall financial plan and avoid disasters. They can make sure things get done, when they need to be done. Being well-prepared will help you get the most out of a financial adviser. Look for someone who has the right skills and experience for your needs. When you do find a financial advisor that you can trust and that gives you good advice that will suit your lifestyle, then you can develop a good relationship and they can help you with your finance decision.
Here are some things to look for when choosing a financial advisor.
1. When visiting a financial advisor you need to know if they are tied to the company that they are working for. A ‘tied’ financial agent works for a company and are tied down to specifically sell and promote the products and services of that company. So even though there might be better financial options elsewhere, they will not show you those options because they are selling you their product and only their product. A tide financial advisor is bound to the company they are employed by and they can help you to some degree by showing you which of their products would be more suited to you, however their advice is biased toward their own products. They will not tell you if there is advice elsewhere that would benefit you more.
2. Many financial advisors will make a great deal of their income by way of commission on what they sell. Because they work on a commission basis they are concerned mainly about making a sale so they can earn money, if they don’t make a sale then they don’t make money. Some advisors will try to sell you extra products or services that you don’t really need just to make extra commission. When choosing a financial advisor make sure that you know what commissions they earn or what the total fees will come to. Don’t fall into the trap of buying everything that they offer because it might not always be in your best interest.
3. Will your financial advisor accept fiduciary responsibility? This is a very important factor to determine whether the financial advisor is working in your best interest or not. An advisor that accepts fiduciary responsibility is obligated under the law to act in the client’s best interest. If an advisor does not accept fiduciary responsibility then they are not obligated to act in your best interest but only in a way that doesn’t hurt you.
4. Does the financial advisor or planner help you with different aspects of your financial plan? Some advisors are qualified in specific areas and only offer advice in that area in which case you would need to seek another advisor for help in other areas. A good advisor should be able to help you in all aspects of financial planning, including insurance, investment and debt management.
The above tips should hopefully help you in your quest to find a good financial advisor that can help you keep your finances on track and have a healthy financial future. Finances can be confusing and overwhelming at times and although it does cost to see a financial advisor they will usually be able to save you a lot of money in the long term.
