Over the course of your life, you may realize that sometimes spending money is the only way to protect yourself from losing money. This can be especially true if you are either in a difficult financial position or perhaps lack discipline when it comes to spending. It may be that your finances are simply too complicated for you to manage and thus require a helping hand. For others, it could simply be that they choose to dream big and have financial goals that may require assistance.
As Les Brown said, “Ask for help not because you are weak but because you want to remain strong.”
Therefore, if you are struggling to keep your checkbook balanced or lack money management skills, the first step to taking control of your finances and achieving your financial goals is to find a financial advisor.
How Financial Advisors Can Help
There is a misconception that financial advisors are only for the affluent. In fact, hiring a financial advisor can help even the non-wealthy to make better financial decisions that in long term will help you achieve your future goals and dreams. In addition, hiring the right financial advisor is the key to ensuring you don’t end up paying for services you don’t require.
Financial advisors can help you from managing expenses for you such as education to handling your investment portfolios and making retirement plans. It could be insurance planning, clearing your debt, or figuring out complicated tax calculations. Perhaps a life-changing event has prompted you to seek a financial advisor, such as marriage, childbirth, divorce, or maybe a health emergency.
A financial advisor in the 1960s and the first female member of the Pacific Stock Exchange, Venita VanCaspel said, “Financial planning is like navigation. If you know where are and where you want to go, navigation isn’t such a great problem. It’s when you don’t know the two points that it’s difficult.” Therefore whatever it may be, knowing what you require assistance with is important so you can decide on an advisor accordingly.
Identify What Services You Require
Finding a financial advisor can be a daunting task for some, especially if you are going about it for the first time. Although finding an advisor isn’t difficult, finding one you can trust can be an arduous journey. In order to ensure you are hiring a reliable financial advisor, it is imperative you first identify the areas that you require assistance with.
Whether you are hiring a financial advisor to handle your personal finances or for wealth management, only after taking your time to carefully contemplate what financial areas your financial advisor will be handling can you decide on a financial advisor that suits your needs best.
Are Your Interests Their Priority?
If looking for a financial advisor is a “first-time” experience for you, then you might be surprised to hear that not all financial advisors have your best interest at heart. Although that does not necessarily mean that they would have ill intentions when conducting their duties, it may mean that your best interest may not be their priority. Here the term “fiduciary duty” comes into play which according to The Canadian Securities Administration defines as “a duty of a person to act in another person’s best interests.”
Fiduciary standards bind some advisors working in the wealth management field as compared to the “suitability standard” which insurance agents, brokers, and other financial advisors abide by. Since they are not bound by fiduciary obligations, they can earn commissions by working through third parties. Some of these advisors may even advise you “for free” and earn only through their commissions while others may charge a fee as well. Although earning commissions isn’t necessarily a “bad” thing it may simply mean you might need to take extra care since they may be working as salespeople for investment and insurance brokerages.
Fiduciaries have ethical and moral responsibilities that they must fulfill such as RIAs (Registered Investment Advisors) and portfolio managers who are CFPs (Certified Financial Planners.) These financial advisors have extensive requirements to fulfill including qualifications and experience in order to become fiduciary advisors. Fee-based financial advisors are almost always fiduciaries since they earn from the fee you pay them for their services. Whether this fee is charged by hourly rate, flat rate, or by earning a percentage of the assets they are overseeing for you, it is what is agreed upon mutually. This helps better safeguard clients since it is in an advisor’s best interest to provide you services that are satisfactory and most beneficial for their clients.
Vetting Your Advisor
Finalizing on a financial advisor can mean the difference between achieving your financial goals or… not. A smart decision could even save you from suffering huge financial losses due to fraud or deception. Therefore, it is imperative you find someone who is trustworthy and ethical since they will be managing your hard-earned money. Certain steps can be taken to make certain you are choosing the right financial advisor.
After you have figured out what you need a financial advisor for and which type of financial advisor you will be hiring, do thorough research on financial advisors in your area.
Although you necessarily do not need to restrict yourself to advisors only that are geographically accessible since after the pandemic, the industry has shifted to offering services online. Online meetings, e-documents, e-signatures, and the latest fintech software has made it extremely convenient for you to work with highly experienced financial advisors that might reside a great distance from you.
One of the best ways to find reliable financial advisors is by word of mouth. Someone who has worked with them and has experienced the services they have to offer. So start by asking family, friends, and colleagues for recommendations. Nevertheless, they too will need to be vetted as well. Start by checking their credentials, qualifications, and their experience. Just because they are qualified doesn’t necessarily mean they follow the true fiduciary standards. Find out what fee structure they adhere to and whether it suits you best.
Search and check the Canadian Securities Administrator to verify their credentials and there you can view their disciplinary history. Make sure no complaints have been filed in the CSA Disciplined List. Any advisors of firms under sanctions will be listed there although it won’t mention names that are currently under investigation.
Another simple vetting step, one most often not considered, is to google them. You might be surprised what the internet can turn up. Any clients they may have worked with, communities they may have worked for, social events they have participated in, and any mention of them in the news may turn up. Check out their social media pages (often part of their marketing strategy) and find reviews or ways to contact any ex-clients they may have worked for. A person’s or their business’ social media page can tell a lot about their values and priorities. Make sure they are aligned with yours.
After you have thoroughly done your homework on them, it may be time you finally set up a meeting date. Make sure you have a list of FAQs prepared. Don’t be shy when asking questions and make sure to ask open-ended questions and ask about their approach to financial planning. Ask questions that are related to your specific requirements and financial situation. If your advisor’s answers are not satisfactory or in any form put you at unease, move on to your next option. Just as important, if your first interview seems highly satisfactory, don’t settle immediately. Make sure to give yourself options before finalizing.
To Conclude
When hiring a financial advisor is important you exercise caution as falling for scammers and fraudsters is more common than you might think. Once you have figured out what it is you are exactly looking for, finding the right advisor for you is a matter of taking steps that makes sure you are hiring a financial advisor that not only best suits your needs but is going to make your life easier by helping you manage your finances.
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