Do you find it impossible to save on a regular schedule? Do you have only a hazy idea where all your money goes, fail to pay your bills on time and sometimes struggle to make ends meet? If so, a financial adviser can help you get control of your money by designing a financial plan that will outline for you how much you should spend, borrow, save and invest.
A large percentage of investors are amateurs who feel that they could profit by professional guidance. They might need someone to show them what rate of return they need to earn on their investments or how much extra money they need to save in order to meet their financial goals. But before you place your financial future in the hands of an adviser you must determine whether he is sufficiently educated, trained and experienced to help you. Credentials like CFA, Chartered Financial Analyst, CFP, Certified Financial Planner, or CPA, Certified Public Accountant, tell you that he has passed a very rigorous course of study. But many of the credentials that are brandished by financial advisers, such as CFM, Certified Financial Manager, and CFMC, Certified Financial Marketing Consultant actually signify very little. At the same time that you verify a potential adviser’s credentials with the issuing organization, you should also verify that he has not been disciplined for rules or ethics violations.
Before you hire a financial adviser, ask him how he will help you meet your financial goals. It would be most beneficial to hire a financial adviser who can provide an overall picture of your financial health. This would include tax planning, retirement and estate planning, as well as insurance advice and education funding advice. Ask him how he chooses investments and what investing approach he considers the most effective. Maybe he can show you evidence that he has achieved success for other clients. Another good question to ask is how long clients typically stay with him. Get references from his other clients.
The Securities and Exchange Commission (SEC) cautions that before you hire any financial professional, you should know what services you will be paying for, how much they will cost, and how the adviser gets paid. Find out exactly how his hourly rate, flat fee, or commission will be calculated. Find out if he is also being paid by the companies whose products he sells.
According to financial-planning analyst Robert Veres, your adviser should be able to provide you with a comprehensive financial plan that outlines how you will earn, save, spend, borrow and invest your money, and an asset-allocation plan that details how much money you will keep in different investment categories. These are building blocks of sound financial decisions and they should be created mutually by you and your adviser. You should not invest a dollar or make a decision until you are satisfied that these foundations are in place and in accordance with your wishes.