What to look for when choosing a financial advisor

Jan 18, 2019

1. Financial Plans: A good financial advisor prepares a detailed financial plan and uses it as the foundation of your relationship. The financial plan guides your financial advisor on how much risk you need to take, how much you need to save, and provides clarity on which investments will be suit those needs.

2. Unbiased: Try to avoid financial advisors who are biased towards using products provided by their own firm. You’ll notice that most financial institutions primarily offer their own products. This is a major conflict of interest. Are they recommending it because it is the best product to suit your needs, or is it being recommended because it will make the firm more money? Ask your advisor how often they use their own companies’ products.

3. Reputation: While it can be difficult to determine the reputation of your advisor there are two distinct ways to check. Complaints, and Reviews. If the advisor has a history of complaints and poor reviews, its best to steer clear. Stick to advisors with little to no complaints and a series of good reviews.

4. Offering: Did you know that many financial advisors are limited to the products and services they can offer? Try to choose an advisor whose licensing allows for purchase of all investment products, including Stocks, bonds, etf’s, mutual funds, Insurance products.  All of these belong in your wealth plan, but if they are limited in what they can offer, you’re the one who suffers.

5. Cost: It is extremely important for your advisor to be able to explain exactly what your costs are. There are four main types of costs: advisor fees, product costs, commissions, & admin fees. You should expect these fees to vary depending on how much money you have invested. Most top advisors are using what is known as fee-based advice, or fee only. These financial advisors primarily rely on a fee for managing your accounts, rather than earning a commission for selling you products. Lowering your cost is one of the best known ways to improve your returns, and a good financial advisor will work with you to achieve this.

 




Tags:
Category: