It is true that we must save for the “rainy” day. Perhaps a certain percentage of our income should be set aside in the case of emergency (medical, hazard, accident or natural disaster) or as miscellaneous expenses. But how effective can you be with your finances and/or financial decisions if you are not properly and professionally advised?
You need a financial advisor. But sometimes, your financial adviser may not offer you the best financial advice that will benefit you in the future. True, just because someone is called a financial adviser does not always mean that they are going to offer you sound financial advice that you can trust and take.
It usually requires a lot of help and effort of very skilled and trustworthy financial adviser before we can feel good and positive that we have the right financial decision. It is the job of a professional financial adviser to help you create an investment goal(s) and help you chart a path to achieving the set goals.
The problem for many people is how to choose a professional financial adviser or who to choose as a financial adviser. There are a lot of professional financial advisors. In Nigeria alone, there are more than 1395 professional financial advisors. In the U.S, there are also more than 271,000 professional financial advisers, according to the federal data.
You can generate a list of potential financial adviser by asking for recommendations from your friends, family and other people you trust. You can also get reliable recommendations from your lawyer or accountant if they are well acquainted with your circumstances. Once you have your list of potential advisers sorted out, the most unavoidably important thing you will do is to ask each of the potential professional financial advisers these 3 questions:
1. What can you do for me?
It is very important that you ask the potential financial adviser what they can offer you as a client. You have to be very clear on what exactly you should expect from them as a client, after all, it is money we’re talking about – your money. So, since money is involved, once you have given them detailed information about your financial situation, ask them what to expect just so you can be clear on things and avoid future heartaches.
2. How do I pay you? How are you paid?
It is very important that you ask the potential financial adviser how they get paid so that you can identify and avoid the commission-based financial advisers who have a financial motivation for selling you the offerings of a specific investment opportunity or a particular organization. This is because the advice a commission-based financial adviser will offer you may not be in your best interest but in the commission or incentive they to hope to receive after selling you the product, investments opportunity or company.
It is highly recommended that you choose a fee-only adviser – that will only charge you based on an hourly or monthly rate or an agreed upon fee – so that you can avoid potential conflicts of interest. Whatever the case, it is vitally important that you have no doubt about what you are getting from the potential financial adviser and how much you will be charged or how much their services will cost you.
3. What are your credentials, past client records, and disciplinary history?
If a potential professional financial adviser claims a professional designation like a Certified financial planner, it is recommended that you verify from the online registry of the organization that offered that certification.
Don’t just ask of the credentials of your potential professional financial adviser, it is vitally important that you verify the credentials.
You can use the “Verify a CFP Professional” tool on the Certified Financial Planner Board of standards platform to verify if someone is a Certified Financial Professional (CFP) if you are in the US.
Did I miss out on some other helpful hints or tips?? I’d like to hear from you. Leave a message in the Comment section, and I’d be sure to read and reply to your message.
Like. Comment. Share.