Financial advisors can be invaluable resources for saving and investing, potentially even helping to grow your wealth. But how can you ensure that the advisor is legitimate?
Search for credentials such as professional certifications and designations from any prospective financial planners you interview, such as certifications. A reliable financial adviser should place your interests before their own and keep disciplinary history and fees transparent.
Qualifications
An advisor may use different names, such as an investment advisor, broker, or certified financial planner. However, just because someone boasts such titles does not guarantee they can represent your best interests. According to Slott, consumers should look for credentials such as Certified Financial Analyst charter holder or Chartered Mutual Fund Counselor which require mastery of complex subjects and adhering to stringent ethical standards.
Advisors offer many services related to financial advising, from money management and budget guidance, through investing and portfolio building to more specialized knowledge such as estate planning or tax preparation.
Understanding an advisor’s fee structure can affect their advice, so most consumer advocates advocate working with fee-only financial professionals who must always act in their best interest. You can check the FINRA BrokerCheck website to review an advisor’s licenses and employment history.
Reputation
Reputation is how others see you – good or bad. It encompasses feeling, taste, perception, and intuition rather than physical qualities such as height and weight.
When finding a financial advisor, it is wise to research various options. A great place to begin searching is through industry associations’ search tools that enable users to filter results based on specialties, compensation models, and the primary languages spoken.
Consider hiring an RIA (registered investment advisor) or CFP (certified financial planner). These professionals must legally act in your best interests, disclosing potential conflicts of interest and fees upfront. When choosing a financial professional, beware of brokers or dually registered persons as these may only act in their best interest and charge higher commissions, as well as selling unsuitable products with unclear benefits and not always being forthcoming about past problems they might be hiding from you.
Fees
Paying an advisor can reveal much about their intentions if they employ high-pressure sales tactics or provide vague answers when explaining their fee structure, which should raise red flags. An ideal advisor would provide direct and clear explanations on how they will add value to your account.
Before selecting a financial advisor, be sure they possess professional credentials that demonstrate their competence at meeting your needs. Look out for CFA or CFP certification, education, and experience credentials.
It’s generally best to seek advice from a fee-only financial planner rather than offering product-driven services since fee-only planners must act as fiduciaries. It can’t earn kickbacks by selling an annuity or mutual fund that may not be in your best interests. Fee-based planners may charge either a flat rate fee, AUM fee percentage fee, or hourly fee (some even combine these methods and require an upfront retainer payment to access their services).
Insurance
Financial advisors work to assist their clients in making well-informed decisions regarding investments, debt repayment, tax liabilities, and retirement. Additionally, they may help with legal documents like wills and revocable living trusts and identify people to make healthcare and financial decisions on behalf of a client should they become incapacitated.
Operating a financial planning or investment advisory firm comes with certain risks, including liability claims over services provided and property loss. Insurance policies can provide vital protection from these costs.
Errors and Omissions insurance for financial advisors provides legal fees and court-awarded damages should you ever be sued due to advice you provided. Business Owner Policy (BOP) offers general liability coverage along with protection for company property such as buildings, office equipment, and vehicles used for company use – plus add-ons like cyber liability coverage, hired and non-owned auto liability, employment practices liability as well as add-on options from leading U.S. providers through a straightforward application online or over the phone from licensed insurance agents. Our licensed agents offer quotes from leading U.S. providers for BOP policies at highly competitive premiums from leading U.S. providers across both medium and premium levels so your clients don’t pay premiums for coverage offered to protect assets such as buildings used for company use as well as protect company assets such as buildings used solely for business use such as office equipment used exclusively for company purposes such as office equipment used exclusively for company property protection as well as protection for company property such as buildings used exclusively for company purposes such as vehicles used for company property such as buildings etc. used for company property as well. Our licensed insurance agents offer competitive quotes across leading U.S. providers via a straightforward application online or by phone.
