If we all knew how to balance a portfolio and plan for our long-term well-being, we could manage our own money. Even if we wanted to though, life just gets too busy to pore over investment textbooks. Most of us will probably need to take financial advice from someone other than ourselves at some point.
How do you know who to trust, though? We talked to some experts on the subject.
What to Look For
If you don’t know anything going into the process, a good place to start is the adviser’s designations.
Benjamin L. Grosz, an attorney at a Washington, D.C.-based firm specializing in tax planning and employee benefits, Ivins, Phillips and Barker, said the most respected designation is that of a certified financial planner (CFP). There are also designations for advisers who specialize in retirement planning.
When thinking about retirement, focus on estate planning and long-term care. In addition, your adviser should make sure assets are properly balanced in your portfolio and that they’ll last. A good adviser should be able to design a portfolio around any assets you have.
Grosz also said people who are self-employed should make special considerations.
“Someone who owns their own business should have a good accountant/CPA (who may or may not be the same advisor they use for their personal financial planning),” he said.
Having a tax adviser will help with the particular challenges of filing when self-employed.
CFPs also undergo a rigorous training program and must have three years’ worth of experience.
Grosz said that financial planners should have strong knowledge in the following areas:
- Retirement and employee benefit issues
- Estate planning
Your adviser should also know who to reach out to if you need additional expertise in a particular area. If your adviser is actively involved in your estate planning, they should be a licensed attorney.
You can use this search engine to find a CFP.
You also want an adviser who acts as a fiduciary, meaning they work in your best interest. Make sure you’re clear on how they are paid. If they work on commission, they may be likely to steer you toward certain investments that pay higher rates.
Make Sure You’re Comfortable
It doesn’t matter how many letters an adviser has after their name if you’re not comfortable with their style.
Caitlin Lewis, spokesperson for Quantum Financial Planning, said the vetting process for your financial adviser is very important.
“To find a planner, I recommend asking your friends, colleagues or family members for a referral,” she said. “Most people will only provide a referral if they are fully satisfied with the service, so any referral you get should be exemplary.”
When you find someone, set up a face-to-face meeting to make sure you gel with them from a financial standpoint. Do their goals and ideas about how much risk to take match yours? If you’re the type of person who wants to be educated about what’s going on with your portfolio, make sure your adviser knows ahead of time and is comfortable providing you resources so you can be fully educated on your investments. Do multiple interviews and find the person who’s most compatible with what you’re trying to achieve.
What do you look for in a financial adviser? Let us know in the comments.
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