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Educational Consumer Tips

Hiring a Financial Advisor

Author: Rachel Gelb
Category: Finance

When searching for financial services, you want a reliable advisor that can offer objective advice for your specific budget and investment needs. Choosing a financial advisor is a crucial decision since they are handling your income and savings. You want a qualified professional that has a vast experience dealing with your type of situation. Consider these tips when hiring a financial advisor.  

Tips for Hiring a Financial Advisor:

Ask for Recommendations.  Ask friends and family members to suggest a financial advisor they have had a successful experience with in the past. For other reliable recommendations ask your banker, accountant, or other contacts from your financial community. Check out trustworthy financial services through to make sure the business is in good standing.  

Interview the Candidates.  Ask the prospects about their education, professional background and qualifications. Look for candidates that have experience including many different aspects of financial planning, especially the areas where you are in need of services. Search for applicants that have at least three years of experience as a financial planner and even more experience as either a broker, insurance agent, accountant, or lawyer. Ask if the candidate participates in continuing education and training to stay up-to-date.
Check for Qualifications.  Make sure the financial advisor you hire is recognized as a Certified Financial Planner (CFP). Visit the CFP Board’s website to verify their certification. Those certified must uphold to certain codes regarding ethics, honesty, and conflicts of interest.  

Ask for References.  Ask the financial advisor to provide a list of recent clients who they have counseled for at least two years. Contact these clients about their satisfaction with the financial services they received. Be sure to ask about the client’s investment returns and their intentions of continuing to use the financial advisor. Ask the financial advisor to provide you with examples of plans and monitoring reports. Look for reports that are done frequently and with good quality.  

Inquire About Compensation.  Financial advisors are compensated in three ways: fee-only, commission-only, and fee/commission. Fee-only advisors charge either an annual or hourly fee for their suggested plans, whether you decide to use them or not. Commission-only advisors do not charge a fee, instead they receive income from the products they sell. Fee/commision advisors charge a smaller fee for their services and collect commision from the products they sell.

Get Everything in Writing.  Ask the advisor to provide a written contract for the services. Make sure the contract includes all the details of the services and compensation. Save a copy of the contract for future reference.  

About the Author: Rachel Gelb is Communications and Marketing Manager for BBB serving Eastern Massachusetts, Maine, Rhode Island and Vermont. Find Rachel on Google +.

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