The field of financial advice is incredibly wide and varied, mainly due to the fact that people are starting to take personal charge of their own financial futures, instead of trusting the welfare systems for this. As a result, experienced financial advisor Keith Springer has developed a number of key pointers to help people choose the financial expert most suitable for their personal needs. Below are his four top tips.
1. Make Sure They Meet with You Regularly
Different financial advisors have different regularity in meeting their clients. This can be due to their personal area of focus. For instance, someone who specializes in insurance products and estate and will planning, is likely to only require annual review meetings. Others, however, set a schedule that is suitable for them, but perhaps not for you. It is important that you feel that you can see your advisor as and when you need to.
2. Receive a Copy of a Past Financial Plan
Financial advisors will, by and large, help you to create a financial plan for the specific product you are interested in, whether that is investments, estates, wealth, or anything else. They should be more than willing to provide you with a copy of a financial plan in the same area that they have created for someone else, naturally with all personal details erased. This will also tell you how committed they are to confidentiality. When you receive the plan, check to see how easy it is to understand and read, and what is and isn’t included in it. If possible, ask your advisor to see a review of the plan that demonstrates how successful each of the tactics and strategies has been.
3. Make Sure Their Compensation Plan Is Fair
Financial advisors are paid in different ways, depending on their work and personal preferences. You need to make sure that those methods are right for you. The most common forms of compensation include:
- A commission based on what the return is they are able to achieve for you.
- A fee based, which is a percentage of the total value of your assets, charged annually. Usually, the percentage is around 1%, but it can go up to 2.5%.
It is believed that the second option will become standard practice, and they are indeed gaining in popularity, particularly in stock portfolios. However, the first option continues to be the most popular across the board. Either way, you have to make sure that the percentage that is charged to you, either in commission or in fee, is a fair one.
4. Are They a CFP?
A CFP is a certified financial planner, which means they have received additional training and experience and that they have the right knowledge and experience in the field of financial planning. To maintain CFP designation, they must also complete regular continuous education credits, which means that they always have the most up to date knowledge. CFP designation is one of the most important designations possible for financial planners, although other financial designations are also beneficial.