Most of the investors contemplate whether hiring a financial advisor would be useful or not. The process of hiring a financial advisor becomes easy when you use a disciplined and sophisticated process. Finding the right person might be time-taking, but it’s worthy in other aspects. Below mentioned are the six steps one shall follow while hiring a financial advisor.
- Understand what kind of financial advice you need.
The selection of the financial advisor depends on your requirements. For example, if you’re investing in the stock market, you will have to look for an advisor who can provide you the best stock market tips. Likewise, every advisor is specialized in specific streams. Some advisors might be an expert in investment management, while others might be specialized in the retirement capital planning processes too. So, it all depends on your requirements. Therefore, you need to understand your requirements clearly to select the right person.
- Look for certified advisors with legitimate credentials.
The highly recommended designations of a financial advisor include:
- CFP – Certified Financial planner.
- PFS – Personal Financial Specialist.
- CFA – Chartered Financial Analyst.
Individuals with any one of the above credentials must strictly adhere to the ethics policy. Thus, hiring a person who has this designation, relevant experience, and extra education would be beneficial.
- Understand how the advisors are compensated.
Experts suggest hiring a fee-only advisor. A fee-only advisor also called no commission financial advisor, doesn’t get paid by from sources other than you. The fee-based advisors will receive compensation on the deals they make. Thus, a fee-based advisor might mislead you by convincing you to buy the product even it’s doesn’t suit your business. It’s better to hire a fee-only advisor.
- Filter the results using the Search engines.
Once you obtain the list of financial advisors, filter them using the Search engines. Perform a screening process with which you will get the list of people who can meet your requirements well. A few advisors work remotely. You’ll have to update your location as a screening criterion, if you aren’t comfortable with remote-working.
- Conduct an interview.
Interviewing the person will allow you to estimate his/her capabilities and weaknesses. Prepare a list of questions to be asked during the interview. These questions help you in finding the ideal advisor. Here are some of the must-ask questions for a financial advisor.
- What qualifications and designations do you have?
- How will our relationship work?
- How long have you been practicing?
- Would you walk through various retirement projections?
- How are you paid?
- Are you a fiduciary advisor?
Assess the answers given by the advisor well and proceed further.
- Verify the credentials.
Verify the credentials of the person thoroughly. Make sure to check the complaint history of the advisor from official organizations like FINRA. A person who has been in the field is likely to have at least one complaint. Rule out those with a large number of complaints and finalize the ideal one.