Finding the right financial advisor is a very important step toward gaining financial security. Before you go about looking for a trusted financial advisor, you need to understand your financial goals and issues. A good way to think about it is like this: We all go to doctors for help with our health issues. A doctor may have you take a series of tests before handing out the appropriate prescription. Similarly, in case of personal finance, you need to better understand your financial goals, aspirations, and desires in the light of your income and savings. The Personal Financial Index® is designed to help you conduct this exercise in a highly intuitive and interactive manner. In just five to ten minutes, this secured and privacy protected tool will present your overall financial health, give you your PFI score, and a financial health analysis report. At this step we also present you a list of our featured financial advisors that you can optionally contact for a free consultation. Below is a list of some tips that we have compiled to help you decide on the right financial advisor for your needs.
| Do a background check |
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| "The advisor has got a fancy office, drives a nice car, and has a lot of rich clients," is not a background check. Check their credentials. Financial advisors offerning comprehensive financial advice typically carry certifications such as a CFP, PFS, etc. Those focused on retirement planning may carry the certification of CRPC. You can verify their credentials by contacting the issuing authorities. Financial advisors are either affiliated with FINRA (a regulatory body for brokers) or they may be registered investment advisors (RIAs). FINRA provides free access to the background information on all licensed brokers that you can check at http://brokercheck.finra.org. The RIAs are required to carry either a state provided ADV or SEC provided ADV in case of large advisory firms. The SEC makes its database of RIAs publicly available at www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Search.aspx. |
| Why do you need a financial advisor? |
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Managing Finances: First and foremost, a planner can examine your personal situation, identify objectives and make specific recommendations. Typically an advisor prepares a comprehensive financial plan for a client that covers major financial goals e.g. retirement, college education, any major purchases in future, insurance, and investment management. Planning for Retirement: What does it mean to you? How can you achieve your goals? This involves a retirement savings plan as well as a withdrawal plan during retirement. Funding For College: For the college education of your loved ones, a financial advisor will help you with the selection of tax efficient plan and appropriate investments. Business Management: Some advisors may also help business owners setup a retirement plan for their employees. They may also help with any buy/sell agreements for business continuity. Insurance: A life insurance agent is typically compensated by an insurance company for selling insurance products. A financial advisor on the other hand will probably look at insurance in the light of your overall finances. Estate Planning: Trusts, wills and life insurance trusts are among the areas for a financial advisor to help you with. |
| Understand how the advisor gets paid |
| Some advisors are called "fee-only" financial planners because they don't receive commissions for any of the products they sell. Commission-based planners might not charge clients for office visits, but they receive compensation from the companies whose products they sell. Some financial planners have a hybrid fee structure. The "fee-based" planners can receive payments for some of the investment products they sell from the companies that created them, but most of their income derives from the fees they charge their clients. |