4 Questions That Help You Find The Right Financial Advisor


A lot of trust is placed in financial advisors. They are tasked with helping us manage our money properly to ensure we remain financially stable in the future. Because it is such an intimate relationship, it is important for each person to find the right financial advisor for them. Different financial advisors excel in different areas, so asking a few questions will help you determine their strengths and whether they are the right financial advisor for your current financial needs.

What Is The Financial Advisor’s Professional Designation?

Many people do not know that there are more than 100 different professional designations for financial advisors. Some professional designations, such as certified financial planner, chartered financial analyst and personal financial specialist, require a CPA credential, while others can be handed out to those with a minimal amount of education and related work experience. Do your research and make sure the advisor is qualified before handing over any of your hard-earned money.

What Services Does The Advisor Provide?

Are you looking for a full package of advising services, including investing and tax services, on a regular basis? Are you looking for someone that you can check with from time to time to ensure that your investments are on track? Both types of financial advisors are available, but they will each have very different requirements and strategies. Before choosing a financial advisor, make sure that the services they offer match up to the services you are interested in. Choosing wrong means that you will either be paying more that you should or be disappointed that the advisor is not doing more for you.

How Do Their Returns Match Up Against Benchmark Returns?

The comparison between the returns that a financial advisor gets and the returns of larger industry benchmarks can show you whether the advisor is providing good advice that will help you increase your wealth. While the stock market is unpredictable, trends can be spotted when comparing the results of a particular stock against the results of the wider industry. Financial advisors use these trends when choosing investments for their clients. If the advisors returns are consistently lower than the benchmarks, it means bad news for the value of your portfolio.

How Is The Financial Advisor Compensated?

There are several different ways that a financial advisor can be compensated. If the advisor has a transparent fee structure, it should be easy to see what you are paying for and how much you are paying for it. In most cases, there is no reason to pay a management fee of more than 1 percent of the total amount of assets being managed. If the fee structure provided to you is difficult to understand or the financial advisor cannot adequately explain how they are compensated, it is a sign that you should probably choose a different financial advisor.

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