A financial advisor is a professional that helps clients assess their financial situation and develop plans to help them reach their future goals. Financial planners will help clients analyze and budget their cash flow, make good investments, assist with retirement planning, plan their estate, get insurance, and minimize their taxes.
The problem is that many financial advisors aren’t exactly what they seem to be. There may be a few things that your financial advisor has forgotten to tell you.
The 7 Facts Your Financial Advisor may not be telling You:
1. I’m not familiar with your entire financial situation
For a financial advisor to be effective, he or she must take the time to get to know a client’s entire financial situation, as well as their goals. A financial advisor is a professional that is experienced and knowledgeable enough to help evaluate, organize, and plan every aspect of a client’s finances. To get the best service, consumers need to look for a planner with extensive financial knowledge and experience.
2. I’m making a commission off of your investments
Many consumers are under the impression that their financial advisor only makes money by charging a fee for their services. However, in most cases, this is untrue. Many financial planners also make commission and earn special bonuses depending on their sales. This isn’t necessarily a bad thing. Unless, of course, the advisor isn’t comfortable disclosing how they are paid.
3. My paycheck is my number one priority
To become a financial advisor registered by the NAPFA or a certified financial planner, a professional must pledge to dedicate themselves to bettering their clients’ financial futures. Investors and other advisors have not taken the pledge to work for their client, not their paycheck.
4. I’m not actually certified
Financial planning takes extensive knowledge, experience, and training. To make sure that your financial advisors is qualified, determine whether they are certified. Look for certifications like Certified Financial Planner, Personal Financial Specialist, and Chartered Financial Consultant before choosing a planner.
5. I’ve had my share of unhappy customers
Most people won’t make it through their entire career without leaving at least one unhappy customer behind. However, several very unhappy customers is a bad sign. To find out about past disciplinary actions, browse through the advisor’s ADV form, which should be registered with the Securities and Exchange Commission.
6. I can’t promise huge returns on your investments
If a financial advisor is promising a certain return on your investment or advising you to invest in the latest “hot” opportunity, proceed with caution. Great financial planners are those that consistently help their clients meet the market average, increase their worth, and pay the least amount during tax season.
7. There’s a good reason why I’m recommending a certain investment and it’s not why you think
Many financial advisors don’t know everything. A planner that specializes in insurance or estate planning may not know everything there is about investing. Sometimes, planners give bad advice due to inexperience or a lack of knowledge. To find the best financial advisor, make sure that he or she has a broad knowledge in a variety of different areas.
Guest Post by AdvisorWorld
Evan’s Take: Some of these should be obvious such that if your Advisor promises you Madoff-like bullet proof and huge returns you should get out of that office, but I believe most Advisors will explain how they will get paid, attempt to understand your situation as a whole and correctly use accreditation acronyms (or lack thereof). I suspect so does AdvisorWorld since they are a referral service for Advisors!