A financial advisor offers advice and expertise to clients based on their financial situation. It’s an important relationship because financial decisions impact your future. You might be wondering how to select the right financial advisor for you and which questions you should ask. This post will answer your questions!
Financial Industry Compliances
The financial industry has two sets of compliances that advisers follow—suitability standard or fiduciary standard. With fiduciary standard, your financial advisor is legally bound to act in your best interest. Fiduciary advisors must put their clients’ interests before their own. They’re known as fee-only advisors because they can’t accept commissions on the investments they recommend.
On the other hand, advisors who follow the suitability standard are legally required to make investments that are suitable for you. Financial advisors following the suitability standard work on commission.
Talk to your friends, family and colleagues to see if they have a financial advisor that they recommend. You want someone you can trust. It’s important to build a solid relationship with your financial advisor. Once you have some names to research, head to Google and see what information you can gather.
There are a couple sites you can look at to research potential financial advisors: brokercheck.com or adviserinfo.sec.gov. These sites allow you to research potential advisors’ background, experience and any disciplinary action.
Talk to Potential Advisors
You’ll want to talk to each potential advisor and ask any questions that you may have. Ask about their relationships with their clients. How do they communicate with clients and how often? What type of clients do they have? How much access will you have to your advisor? If you have questions about their background and experience, this is a good time to ask.
While you’re interviewing people, ask about their investment strategy. You want to make sure your philosophy and the advisor’s strategy mesh well together. For example, if you’re environmentally conscious, you might not want investments in the oil and gas industry.
Hopefully you now have a better idea of how to evaluate and select a financial advisor. If you have additional questions, don’t hesitate to contact us.