I see many articles talking about how to choose the right professional to work with when it comes to financial matters. Let's face it, this is a very delicate area; one where you will need to feel very comfortable sharing personal information. And how about finding a financial advisor you can trust? You should be able to feel that you can trust the person that you're dealing with to provide you with the best information available according to your needs.
So how do you find this person, and what should you do to make sure he or she is the right advisor to help you reach your financial goals?
First, let's talk about common terms associated with financial advisors. To start with, how do they charge for their services?
Second, what does all that alphabet soup mean behind someone’s name? There are many credentials and specialties that financial advisors can have.
The most highly recognized are those that also require the most study, a comprehensive board examination and annual maintenance of education: the Certified Public Accountant/Personal Financial Specialist, and the Certified Financial Planner. The Chartered Financial Analyst and the Attorney falls into this category as well. Commission-based advisors also need to pass uniform exams, and maintain their Registered Representative and insurance licenses with continuing education. There are many other specialized certifications that follow: insurance, elder planning, long term care, employee benefits, and tax preparation. And the list grows. Forbes magazine published an informative article identifying many credentials several years ago.
It's hard to know just how to start when deciding to engage a financial advisor. It helps to understand your reasons why you've decided it's time to act. Impending retirement, handling an inheritance, a job change, a divorce or loss of a spouse, preparing for children's education – these are all triggers for seeking professional help. Identifying your goals is the first step in the process.
How do you find the right advisor for your needs? Beyond asking a friend for a referral, there are many resources that will provide you with qualified candidates. Here is a short list to get you started:
Once you have started the search, call the candidates and ask direct questions that will help you find the right fit. You can look up the advisor’s regulatory registration and disciplinary status on the SEC’s (Securities and Exchange Commission) website or use FINRA’s (Financial Industry Regulatory Authority) page for investor education. NAPFA (National Association of Personal Financial Advisors) has information on its website specifically for the public. “Pursuit of a Financial Advisor Field Guide,” available at NAPFA.org is a downloadable book that will help consumers in their due diligence. It features important questions to ask, and how to evaluate an advisor according to your needs.
Lastly, all of the credentials and certifications aside, do you feel comfortable with the individual financial advisor? Do they listen to you, seek to understand your questions and provide information in a manner that you can understand and act upon? The financial advisory relationship should be grounded in trust, concern and working in the client’s best interest.
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