How to Choose a Financial Advisor

As millions of baby boomers prepare for and settle into retirement, the financial advisement business is booming. But anyone can call themselves a financial advisor, and financial advisement scams are common, so when you’re ready to get sound financial advice, be prepared to do a little research. Here’s how to choose the perfect advisor for your needs.

Ask About Training and Certifications

Though not required, certification as a certified financial planner (CFP) is the best indication you’ll get that your financial planner is qualified to navigate issues ranging from credit to retirement and investments. Ask your financial planner what specific training and qualifications he or she brings to the table, and how long he or she has been in business.

Ask How Your Advisor Makes Money

How to Choose a Financial Advisor
How to Choose a Financial Advisor

The safest bet is to choose a financial advisor to whom you pay a flat fee. Though this arrangement might be a little costly at first, it’s the best way to protect your money. Otherwise you might be relying on a planner who receives commissions from other companies to sell you products that might not benefit you. Read your contract carefully to get a firm idea of what you’ll have to pay and when you’ll have to pay it, since bait and switch tactics are never a good sign.

Don’t Trust Sales Calls

When someone calls or emails you offering financial planning services, be wary. The best financial planner is one you find yourself, not someone who is so desperate for work that he or she has resorted to calling strangers. Moreover, many financial planning scams begin with a cold call or unsolicited email, so proceed with caution.

Check References and Reviews

You’re putting your financial future into the hands of a complete stranger, and this decision warrants plenty of research. Check out your advisor’s online reputation, and ask for a few references. It’s best if these references span years, rather than all coming from recent clients, since problems with financial advice often take years to appear.

Ask What to Expect

Knowing what to expect out of your relationship can help you determine whether this advisor is a good fit for your needs. Ask the following questions:

  • Can I see a sample financial plan?
  • How often should I expect to communicate with you?
  • Who will work on my finances? Will it be you, another member of your team, or a group of people?
  • What specific services do you provide?
  • What types of clients do you specialize in?
  • What is your philosophy about investments and retirement savings?

Ask About Alternative Options

Financial advisors aren’t just for the super wealthy, but some are better at helping the non-wealthy than others. If your financial advisor only manages investments or specializes in helping people multiply their wealth, he or she might not be the best fit if you are of lesser means. Ask your financial advisor not only what he or she can do for your investments, but also what can be done to improve your daily stress and financial challenges.

For instance, some financial advisors can help you weigh the relative merits of a reverse mortgage, while others may have no experience at all working with reverse mortgages. Ensure your financial advisor is open to options that give you financial freedom, not just those that build wealth.

Annie Doisy is a reverse mortgage expert who helps seniors enhance their lives by taking advantage of the equity in their homes. Annie writes for ReverseMortgages.com where her goal is to educate consumers on a wide range of topics around mortgages and other financial services.

( Photo by LendingMemo )


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