Here are a few things to know about financial advisors
Financial planners or advisors advise people on how to save, invest, and grow their money. They help people focus on a specific goal and help them achieve this goal; this can involve preparing the person for purchasing a house or how to get the most of their assets. While some financial advisors specialize in a particular financial area such as retirement, others advise on the range of financial areas. Financial planners or advisors are not stockbrokers or accountants who help lower tax bills, or they are not insurance agents who advise people with various insurance policies.
The most authentic advisors will have a CFP (a credential that expands Certified Financial Planner), which is extremely significant.
Financial advisors, usually, earn hourly or flat rates for services rendered.
Why do people need a financial advisor? The best financial advisors are well equipped to assist in saving, investing, and growing money for one. So, hiring a financial advisor is effective and time-saving. The money you will pay to a financial advisor is worth it as you will have a comfortable retirement, afford a college education for your child, or get to choose the right mortgage when necessary.
To find the best financial advisor, look for someone who is a CFP. While CPF is not a guarantee of credibility or efficiency, it assures of reliability. Also, get recommendations for the best financial advisors from your network. Hiring a financial advisor who has substantial experience also helps. The National Association of Personal Financial Advisors (NAPFA) has some of the popular and best financial advisors as its members who operate on a fee-only basis. This ensures that they do not direct your money towards any investment from which they get a commission. Another group of credible CFPs you can go for are from the Garrett Planning Network. The CFPs in this group devote a certain amount of time to smaller projects at an hourly rate. They can assist you if you need the best financial advisor, for example, to ask a few questions. You can pay by the hour and be done with it.
However, it is good to remember that not all fee-based financial advisors are the best as opposed to the ones that earn from commissions. For instance, if a fee-based financial advisor earns 1 percent of the value of your assets and if you need to dissolve your assets, the advisor might advise you against it because his fee is based on the value of your assets. If you don’t have plenty of assets, it is best to choose financial advisors who charge on an hourly basis. CFPs that charge on an hourly basis are just starting out on their jobs and will probably be more meticulous with their work given that they have to establish a credible reputation.
It will be beneficial to choose a fiduciary, one who has pledged to act in the best interests of his client. If you find financial advisors who are not fiduciaries, they may suggest plans that are suitable for you, but these may not be the best for you. Ensure you do a background check on a financial advisor before you choose one. Ensure the credentials of the financial advisor is valid and updated.