investing

How to choose a financial adviser

 

Whether you have $1,000 in the bank or $100,000 in the bank, bad financial advice can cost you dearly. On the other hand, a trusted financial adviser can be well worth their fees in the long run. The trick of course is to find the right adviser for you.

Family and friends are always the best sources for information on good financial advisers, but their recommendations shouldn't be the last word. Go online to the National Association of Personal Financial Advisors to find fee-only financial planners. And Certified Financial Planners Board of Standards website has a great database of CFPs for you to search through. You're going to see many, many professional designations in the financial services industry. Some of these represent years of study. Some are awarded after a weekend seminar. But in general, advisors holding a certified financial planner or CFP credential have met rigorous education, experience, and ethics requirements.

Only you know what your goals and needs are. It's time to interview several planners and see if they meet those goals. Find out what designations they hold and what it took to earn them. Ask for references, their work history, what services they offer, and how they get paid. Investment advisors, brokers, and financial planners are regulated by different groups. Once you know what kind of financial services professional you're dealing with, you can do a background check with the groups that they're affiliated with.

And advisers don't work for free. They can be paid by commission, fees, or a percentage of assets under management, or some combination of these. Advisers that get paid through commissions may have conflicts of interest when working with you; and at this time they don't have to disclose those conflicts of interest. There's no guarantee that a fee-only planner will be any better than a commission counterpart, but at least you'll know what your money is buying. For advice on how to choose a financial adviser, visit Bankrate.com.

 

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