I found a Financial Adviser, now what?

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Hey! It’s been awhile. Well, a bit over 4 months since my last post.

In the interest of saving time, let’s have a quick refresher. The last time we talked about the importance of finding a financial adviser to start your financial journey which is quite a daunting task especially with the plethora of financial products and countless hucksters pushing sales down your throat.

Naturally, you would need someone, an ally, who’d sift through the mess and help you out. That’s where the financial adviser comes in. Also, an important thing to keep in mind is that the value of advice is not ‘timing’ the market, which, I believe is impossible, but to help you figure out your goals and guide you to achieving them.

Now we’re up to speed, right?

Great! But what if you find an adviser, how are you supposed to also weed out the good (the ones who put your interest first) versus the bad (someone just trying to score a commission)?

We start with asking the right questions and since there is no point in reinventing the wheel, we will be borrowing heavily from The National Association of Personal Financial Advisors’ “Tough Questions To Ask Your Advisor.” Since there are over 20 questions, we’ll just narrow to the most salient ones while also combining some others.

  1. Adviser Background

You should ask what their educational background is and whether they have credentials like the Registered Financial Planner or Registered Financial Consultant. Also include how many years they’ve been practicing as advisers. This helps you know if they have the knowledge base necessary to give you the right advice and the experience necessary to split between theory and how to implement it.

  • Compensation

As I’ve written previously, how advisers get paid is one of the most important details to know since it helps you know if your interests are aligned.

Ask if they are (i) Fee-only, (ii) Commission only or (iii) a combination of both. This helps you understand if an adviser might be biased in favor of any single product like insurance or mutual funds or they are impartial since they’re only paid when they give advice.

Also, if adviser refers professionals like lawyers or accountants, be sure to find out if they get referral fees. This helps you know if there are unsavory deals which could also pad the cost of advice as the ‘professional’ might charge you higher to pay your adviser.

  • Services

Once you know how they earn money, you can ask in greater detail what services they offer. Do they offer advice on the entire gamut from goal setting to tax planning and even up to education planning (funding your children’s college education)? This bit helps you know if the fees are worth paying for and whether they full address what your needs may be.

Another important question is whether they provide a written analysis of your financial situation and the recommendations? As this helps you see a clearer picture of your circumstances and what to do about it.

This should be followed up with the question of whether they help you with implementation and is the advice ongoing? This helps you know if they can fully participate in your journey and whether you will need more “allies”. Depending on your needs, you might have to look deeper to find that adviser that meshes well with your needs and your wallet.

I hope this small list of questions will help you sift the “wheat from the chaff” and onboard an adviser you can truly trust.

If you have questions about the markets, finance or just about anything, feel free to email me at [email protected] and I’ll get back to you as soon as I can. Your questions may also be featured on my future posts so you can look forward to that.

Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. This column is mainly for your entertainment and education only.

Tags: AlphaEdge Research, Personal Finance, Getting Started, Beginners, Due Diligence

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