These Mistakes Could Cost You Big Time
With financial security on the line, hiring a financial advisor is a smart move. This professional plays an important role in helping you to meet long-term financial goals, such as preparing for retirement or saving for secondary education for kids and grandkids.
Choosing the wrong person, however, could negatively affect the future of your savings and become a major source of stress. Here’s where you can run into problems and how to avoid making these critical mistakes.
Failing to Research Before Hiring a Financial Advisor
One of the best ways to gauge how well a financial advisor will perform in the future is to do a little digging into their work history. Long before narrowing it down to one or two potential hires, asking friends and family for referrals is a good starting place. To properly vet suggested advisors, research them online and read reviews left by previous clients on Google, Yelp, the BBB or other sites.
In addition to how well they work for others, it’s important to be certain their credentials check out. A financial advisor should hold CFP or CFA credentials because of the level of training required to earn these certifications. There are websites that can help you verify these claims.
Ignoring Your Gut
Although referrals play an important role in finding a financial advisor, don’t forget to make sure suggested professionals are a good fit for you. Advisors have different strategies and each individual has their own financial goals.
For those who are young and want to earn aggressively, a professional who aligns with that vision won’t stand in the way of investments with greater risks and greater rewards. In the same vein, adults nearing retirement often prefer more conservative investments and should find an advisor who won’t push them to take risks they aren’t comfortable with.
Failing to Hire Someone Who Acts as a Fiduciary
A fiduciary is ethically bound to make decisions and investments with their clients best interests in mind. This also means your advisor will be required to avoid any situations that would conflict with giving their clients the best care, such as accepting commissions for recommending specific products.
Forgetting to Ask About Fees
Many reputable financial advisors operate on a fee-based model, charging a flat fee for their services. This isn’t true for everyone, however. Some charge a percentage of the assets in their care. Knowing what the fees are ahead of time will help you avoid an unpleasant surprise.
Take your time when you’re looking to hire a financial professional. By avoiding these common mistakes, you can confidently plan for the next phase of your life.
~ Here’s to Your Financial Health!