How to find a financial planner is a classic and important question to ensure that you are putting your money in the hands of a competent professional to make the best decisions.
Anúncios
We will guide you through the best steps of how to find a financial planner, helping you identify your financial needs, the credentials to look for, the types of services offered and the price of this professional.
Thus, we hope to answer all your questions about how to find a financial planner, because in the end you will know everything you need to know to make the best decision and ensure that your financial life is in the right hands.
1. Identify your financial needs
When looking for a financial advisor, it is essential to understand your needs to ensure that you are hiring the right professional.
Financial advisors offer many services, so knowing exactly what you need helps direct your search to the right professional.
If you’re looking for general guidance, choose a consultant who offers a complete service, helping you structure your budget, financial goals, retirement planning, and even succession planning.
On the other hand, if you want to consult thinking about a specific area, such as investments, debt management or strategies to pay less taxes.
Anúncios
Now, if your concern is personal finances, a consultant can guide you in prioritizing long-term goals.
2. Know what credentials to look for
When you’re looking for a financial advisor, you should understand what credentials to look for, as many professionals use titles like “financial advisor,” “financial planner,” “portfolio manager,” and even “financial therapist.”
Anúncios
However, these titles do not necessarily indicate specific qualification or training, so it is important to go beyond the title and check the consultant’s actual education before making any choices.
See if the advisor is a fiduciary, i.e., if he has a legal obligation to act in the best interests of his clients, rather than prioritizing his own interests. To do this, try to find out if he has the Certified Financial Planner (CFP).
This issue is fundamental, since many advisors do not seek the best for the client, investing the clients’ money in assets that pay commission for the investments to the advisor.
Another important credential is Registered Investment Advisors (RIA), which are advisors registered and regulated by the U.S. Securities and Exchange Commission.
3. Know all the services you are hiring (How to find a financial planner)
There are several ways to receive financial advice, and choosing the right service depends on your personal preferences, needs, and your budget.
In the past, financial advisors were located in offices or banks. However, nowadays you can hire a consultant directly from your home, over the internet.
If your primary goal is to invest, consider working with a robo-advisor, a digital service that offers simplified investment management at a low cost.
The process usually involves answering a few questions online, and computer algorithms create an investment portfolio based on your goals and risk tolerance. We make it clear right away that this service does not replace the financial advisor.
Another alternative is the online financial planning service, through which you have access to financial advisors through digital platforms.
These services offer, from automated investment management, the possibility of consulting a team of financial advisors when you have questions.
You can also hire services such as Facet Wealth and Empower, which are for financial planners, with digital service
The choice between these options should be based on the level of financial support you need, the type of services you need, and how much you want to spend.
4. Know exactly how much you want to spend
When considering hiring a financial advisor, you should analyze the cost and still ensure that the services you are hiring are really fair.
Robo-advisors are the most affordable option for many, often charging an annual fee based on a percentage of the assets they manage.
These fees start at 0.25% and can go up to 0.50%.
For example, if you have an account balance of $50,000, a fee of 0.25% would result in an annual cost of $125.00.
Online financial planning services, on the other hand, tend to charge a fee, a percentage of the assets, or both.
For example, Empower charges 0.49% to 0.89% of assets under management each year, while Facet Wealth starts with a flat fee of $1,000 per year.
In this way, with the price increasing depending on the complexity of your financial situation.
Traditional financial advisors charge a percentage of assets under management, averaging 1.05%.
Ultimately, how much you should spend on a financial advisor depends on your personal financial situation.
5. Look at the financial advisor’s background (How to find a financial planner)
When choosing a financial advisor, look at the professional’s background to ensure they are reliable and qualified to manage your finances.
Regardless of the titles, certifications, or licenses they may claim to have, it is their responsibility to verify this information and employment history.
Start by checking the Consultant’s ADV Form, a document that provides details about their business practices, fees, and any legal or regulatory issues.
You should also use tools such as FINRA’s BrokerCheck, where it researches an advisor’s employment history, including any disciplinary actions or complaints that may have been filed against them.
Take the time to research and verify a consultant’s credentials. This way, you can avoid potential risks and ensure that your money will be in safe hands.
6. Hire the financial advisor
After going through all the steps to choose the financial advisor, it’s time to close the contract.
Firstly, you will have a meeting with the consultant, where you will discuss your financial situation, goals, and expectations to ensure that the consultant can meet your needs.
If satisfied after the initial meeting, the consultant will provide a letter of commitment.
This letter outlines your ethical principles, what you can expect from the relationship, and any potential conflicts of interest.
Then, the consultant will give you legal documents to sign. This typically includes an ADV Form, which provides information about the consultant’s qualifications and business practices, and a CRS Form, which is a summary of relationships with other clients.
After closing the deal, the consultant will begin to gather information about your financial situation. Including your income, debts, assets, and other financial data.
From then on, they began to manage their finances according to the plan they defined together.
Conclusion (How to find a financial planner)
By following the steps outlined for finding a financial planner, it is clear that finding the right professional requires careful consideration of your financial needs, the planner’s credentials, the services offered, and the costs involved.
Every step, from researching credentials to choosing the right advisor and setting the price, helps create a strong foundation for a trusting relationship and effective financial management
Thus, you will be ready to choose a financial advisor that meets your expectations.