Things You Need to Know Before Hiring a Financial Advisor

Have you been approached by a financial advisor but you are not sure about the things you need to hire one?

Imagine someone walking up to you to tell you he or she can help you invest your money and all you need to do is relax and watch your money grow.

I bet you are going to give the person a thumbs up. But when the person say he or she will need a small percentage from your portfolio, you will begin to question their intention.

In this article we will be discussing things you need to know before hiring a financial advisor.

Who is a financial advisor?

A financial advisor simply put refers to anyone who helps people to manage their money. Financial planner takes more holistic approach to your financial situations.

Looking at certain areas like retirement planning, insurance needs and personal finance.

Financial planners operate under strict recommendations that suits their client’s objectives and risk tolerance.

Duties of a financial advisors

  • Everyone’s financial situation is unique and may require the services of a financial advisor.
  • A financial advisor can help you determine your biggest financial goals which might be home, car, retirement plan or education. These things can be expensive and should be adequately prepared for.
  • A financial advisor can help access the client’s financial standing. They can figure out the total asset and liabilities of an individual to achieve their goals.
  • They also proffer advice on how to build emergency funds.
  • Deals with client’s portfolios and update existing data.

What exactly are the things you need to know before hiring a financial advisor?

  • First of all you need to make sure the financial advisor you are choosing have your good intentions at heart.
  • You need to know the basics about finance.
  • Know the exact amount you will be paying for your financial advice.
  • Be clear that it is worth it, from what you are paying for.
  • If you have no advice you can make a lot of mistakes but if you have good advice you can learn how to save for retirement, how to manage your tax environment and how much to put for kids education if you have one.

Questions you need to ask before hiring a financial adviser?

  • Do they have your interest in mind?
  • Can a financial adviser get you an efficient portfolio personalized to your needs?
  • Can they tell you how much they are willing to charge for their service?
  • Are they confident about the market trends?
  • Can they educate you on how to handle your emotions during market ups and downs?
  • How much money should you have before hiring a financial adviser?

 Importance of having a financial advisor

  1. It is important to have good financial advisor because of the following points below:
  2. A good financial advisor that knows about the market can help you manage your money beyond your expectation.
  3. The education you get from a financial advisor can help you learn about the most important part of the market which is emotional control.
  4. A competent financial adviser will help you figure out investments that matches your lifestyle.
  5. A financial advisor can serve as a financial therapist
  6. They protect your money against tax laws, accounting, state planning Etc.
  7. They can get you an efficient portfolio personalized to your needs.

 

Reasons why you might not need a financial advisor

  • There are lots of financial advisory that are being spent billions of dollars on yearly to convince people on how to invest.
  • Most of the financial advisors rarely bit the market: Make sure you research carefully whatever it is you are putting your money into before hiring a financial advisor.
  • The fees they charge are not based on how much money you invest, even if you lose your money in the process of trading, they already have their own fees deducted.
  • They also get a raise if they lose money for you less than the market loses.
  • The high percentage based fees might eventually make you lose your profit.
  • They are interested in short term gain and not long term.
  • By carefully choosing an individual stock, you might be likely to outperform some these financial advisors.
  • At times choosing high quality individual stocks and waiting for them to put their stocks on sales is the best investment strategy for people that wants to avoid paying a financial advisor.

In conclusion, if you have no advice you can really make great errors but if you have good advice, you can learn how to plan and save towards your financial goals.

Financial advisors are always around to educate you on how to allocate your resources.

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