How to Find the Best Financial Planner
No matter how good you are at managing money and investments, but it is best to seek help from professionals to ensure safe retirement and financial freedom. The best thing about being in charge of your money is to choose your financial planner. But this choice is surely not an easy one. How to find out if the financial advisor is trustworthy and reputable? Here are 6 good indicators of whether the financial planner sitting across you is good or not and should he be trusted or not:
1. Certification: Though, many people argue that lot of good planners are not certified financial planners, don't give into this temptation. But, certification is surely one of the industry's gold standard as it ensures that the planners will adhere to the Certified Financial Planners Board of Standard professional conduct code, which states that the interest of the client must reign supreme of the financial advisor at all times. It is best to work with certified advisor as they have completed the curriculum, pass a rigorous exam, meet the experience requirements and also pass the background and ethics check.
2. Asks for the fee: Professional financial planners will never work for free. Financial planners are paid in one of the two ways: upfront fees which might be hourly or on percentage basis and second may be the commission basis, the advisor is paid every time the investment is bought or sold. Upfront fees model is desirable as there is no financial incentive for the advisor to buy or sell, whereas, the commission might encourage the planners to engage in frequent trades than honor the fiduciary duty. It means that the financial planner will work in your best interest. Check online to find the financial advisors that ask for upfront fee.
3. No tall promises: If the financial advisor states that he or she can outperform the market, this is a red flag. As per the rules and regulations, specific returns cannot be advertised. To outperform the market and get better returns than the market average is quite difficult and it requires taking big risks with your money. Though, few advisors might be able to do it occasionally, but consistently outperforming the market is rare. Rather, trust the financial advisor who advises you on proper asset allocation on the basis of the risk tolerance and time horizon and the economic turmoils.
4. Ask your financial goals: The planner should not only worry about the numbers rather they should help you plan for your life and money. The financial advisor who has similar values like you must be preferred. Some planners might have expertise in estate planning, insurance, retirement or mortgage. When you meet the planner, don't hesitate in asking questions such as:
* How experienced are you?
* What are your priorities: pay off the debt or save for the retirement?
* How to reduce the investment risks with the age?
5. Management style: The financial advisors might work in two ways, firstly manage your money for you and the second is to manage the money with you. Different people have different needs, so there is no one right way to work with the planner.
6. Contract: When you select the financial planner, there need to be a witten agreement between you two on how the money will be managed. Read the contract papers very carefully and ask the questions if you are not sure about something. If there is something that you are not comfortable with, bring it up immediately with the financial planner. Few points that the contract must state are:
* Are you handing over your account to him?
* Will the planner check in with you before rebalancing the accounts?
* The fees criteria is mentioned clearly
These six tips will help you find the best financial planner, who will ensure a safe and comfortable financial future. One last thing, never forget to check for the reviews and testimonials for the financial planner online. There are many websites where people leave honest reviews about their experience of working with financial planners. You can even ask your friends and relatives for some suggestions and take their first hand review in mind.