Using a skilled financial planner is a great way to increase your investment returns, and build and sustain a successful portfolio. It can be tricky to find one who is worthy of managing your money. There’s so many of them out there, but not all are capable of helping you reap the biggest rewards possible. How will you know who’s the real deal? Here are five questions to ask any financial planner before parting with your money.
1. Do you have my best interests at heart?
There are two words you need to remember – fiduciary and suitability. A ‘fiduciary’ will commit to acting solely on your behalf. He’ll treat your money as if it’s his own. He will recommend only what you need, even if it means he gets less income. Say that yacht you’ve spent all your life saving for is really just draining your finances, he’ll advise against it. A ‘suitability’ will only recommend whatever is ‘suitable’ for you at that point in time. If your circumstances change, he probably won’t tell you to adjust your strategy accordingly, because there will be a negative impact on his income. We’ll discuss this in the next section.
2. How will your recommendations impact your income?
Fiduciaries are certified advisors. However, ‘suitability’ is an advisor who combines advising with selling. They may sell stocks, mutual funds, insurance and such, usually for a commission, so you need to be aware of the possibility that they’ll try to sell you things you don’t need. An example of this would be if he happens to be an insurance agent too, and you purchase a policy from him. If you don’t need it anymore, he won’t remind you to stop renewing it.
3. What qualifications, credentials and licences do you have?
If you need a plan, but not a money manager, you need a certified financial planner. They have undergone stringent board exams and have several years experience under their belt. If a manager is what you’re after, look out for a registered investment adviser who has had to register with the SEC.
4. What do you charge for your services?
Find out if they charge an initial planning fee, whether they charge a percentage for assets they manage, and as discussed earlier, whether they make any money from selling you a specific product. Knowing how much they’re going to charge you will reveal whether they have an incentive to sell you things.
4. What types of clients do you specialise in?
Some financial planners have a niche. If you have a specific interest, such as charitable causes, then find a planner who focuses on these areas. Or if you have a young family or are planning to retire, find an adviser who deals with clients in similar situations. Most planners have the propensity to work with clients similar to them in age or interests, so they’ll better understand their clients’ needs.
So there you have it – the most important questions to ask a financial planner before making your decision. Remember no question is a stupid question. It’s your hard-earned money, so take the time to really make an informed choice. Contact a reputable company like My Wealth Solutions and have your questions ready; this is about your money and your future.
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