Learn How to Choose a Financial Advisor

Learn How to Choose a Financial Advisor

I’ve seen in my a lot of helping those with their investments that there looks like it’s two kinds of financial advisors. The first kind is the person who will say or do anything to make a buck off of you. Sadly, that is the majority of advisors on the market. They’re interested in selling you whatever product will earn them the very best commission, no matter if it suits you.

The other type of advisor may be the person who truly does worry about your preferences. But even those advisors will disagree on the best course of action to suit your needs. More on that in a very second.

So how will you distinguish between the advisor who just wants to produce a buck off of you and the one that cares? My best advice is don’t take anything at face value. Do your research. Meet with the possibility advisor and look at your objectives. Treat this being an employment interview when your advisor is a staff member. Read my special set of financial advisor warning flags (see bottom of the article to get a URL to the report) that may help you get rid of the bad ones. Screen your ones who try and hide information from you or try to hype up any particular investment.

wise and attentive people will have unique opinions about a good investment.

After you’ve narrowed down their email list, it’s time to select the advisor who best matches your values and objectives. And this can be probably the most difficult – and most important – task.

Very smart, thoughtful, and caring advisors will surely have unique opinions on the constitutes a good investment. Let’s utilize the variable annuity for example. I’ve written extensively about the problems I see with variable annuities. Every time I write one particular article, I get several emails from financial advisors who I’m sure are incredibly earnest where you can lot of integrity, however, they disagree vehemently with my position. And they’ll help with a very well-thought-out argument stating their case.

I’ve often wondered, how can we both have our clients’ interests as the primary goal and yet come to opposite conclusions? After running into this case time and again, it takes place in my experience which it must conclude whatever you value and everything you place a high priority on.

Investing is only treating several trade-offs.

All of investing is about balancing risk and reward, and risk and reward both come in numerous forms. An advisor who puts safety first and concentrates on trying to never lose a dime for his clients will likely recommend low-yielding but safe investments like CDs and bonds. An advisor like me, on the other hand, who puts a priority on starting a maximum volume of income to suit your needs to survive will recommend something more important. A CPA that’s mostly worried about minimizing this year’s taxes may let you know that converting a traditional IRA with a Roth is an extremely bad idea, while I could imagine it’s a really good idea. We’re both sincere and attuned to your needs; we simply get lucky and believe various things should take priority.

So what’s an angel investor to accomplish?

Before you search for an industry expert, whether it’s an educator or possibly a money manager, think long and hard about your objectives plus your values. Find out where your priorities lie. Then ask lots of questions as you interview to get the advisor who best matches your preferences. When it’s a good fit, chances are you’ll know promptly.

Any financial advisor worth her or his salt will welcome the opportunity to review your preferences and objectives, and they’ll recognize when their philosophy isn’t a match with yours. When I meet with clients, I can tell when someone is an excellent fit. If they’re not a great fit, I’ll politely tell them so and make an effort to direct them to another advisor who can be a better match.

I guess determining the best financial advisor is like dating. You’ll meet several scumbags and genuinely nice those who don’t quite fit in the process, but if you find the appropriate match, you realize. And the right match helps to make the difference.