Sound, professional advice can make the difference between an early retirement and working long past your prime. It can also mean the difference between saving big bucks at tax time or hurting big when the tax man comes calling. Finally, getting professional guidance can mean peace of mind when the bills come or when you’re struggling to make ends meet. Whether you’re building your assets, minimizing your liability or managing your money, a good financial advisor is critical. Here’s how to find the best one for you.
Know when you need advice
Financial affairs are simply too complicated to go through alone. That doesn’t mean that every guy needs a full-time money manager, but at some point in your life, you will need financial advice. If you’re buying a life insurance policy, you’ll need financial advice. After all, you’re asking the question: How much will my loved ones need in my absence? If you’re planning your estate or opening a retirement plan, you’re in the market for financial advice. Going through life changes, such as marriage, divorce, buying or selling property, the death of a parent, or getting a major inheritance are all situations where a financial advisor can be beneficial.Unfortunately, there’s no numerical point where having a consultant becomes a “must have.” As a rule of thumb, you need not bother with a financial advisor if your income level is below $100,000. But when precisely you should hire a financial advisor after that depends on how good you are at managing your financial affairs and how much gain a financial advisor can give you compared to his cost. Once you find that you have a high level of income or a surplus of disposable income, it’s probably worth talking to a few financial advisors to see how they can help you manage your money.
Target the right specialist
You have to know what you want. Define your needs beforehand so you can find the perfect person to provide you with the exact help you're looking for. The term “Financial advisor” actually refers to a broad category, so you need to narrow your search by field. While there are specialists who only focus on matters of retirement or insurance, you should find a firm that can help you fit all of your needs.One stop shopping is important here because someone other than you needs a clear idea of the big picture, although bigger firms might use a team of specialists to help you. But if you’re consulting a financial advisor for a one-time transaction, make sure they have experience in that specialty by looking at their past or current client load.
Check them out
Just like hiring any professional, you’ll want to see your financial advisor's credentials, such as degrees and licenses. When you see those credentials, verify them by making a few phone calls or checking online with your state to make sure they are not fraudulent. If they’re selling investment advice and they manage assets in excess of $25 million, they must file an ADV form with the Securities and Exchange Commission -- ask to see it. If they are below the $25 million mark, ask to see their state form equivalent; most states require financial planners to file papers with them. Finally, ask them what, if any, professional organizations they belong to -- any financial planner will belong to at least one. Do yourself a favor and check that organization’s website to make sure it’s legit.Interview your advisor, not the other way around
Don’t forget: you are his boss. An interview with a financial advisor means that he should be trying to sell you on his services and be able to determine your needs. You should use your interview time to determine if he’s someone you can work with. Prepare a list of questions for him, like how he gets paid (some charge a fee, others take a cut of the deal), what experience he has, and how he would handle specific situations. Treat him like a potential employee. Find out how long he’s been in his line of business. Over three years is good, but five years or more is ideal.Make the first hour of your meeting an open discussion period. You should be addressing your needs and questions, getting references, and getting an overall feeling of the advisors investment philosophy.
Get advice from friends and other professionals
One of the best ways to find a financial advisor is to go by word of mouth. While you can always ask people you’re close to, they may not have enough savvy to help you find the right guy. If you’ve found a particularly good professional, say a lawyer, it pays to ask him who he’d recommend -- he might even use the same guy. Good professionals tend to know other good professionals, so if you’ve found one, you’ve probably found a network. You just have to ask.Find an advisor that suits your needs/philosophy
He can be the best advisor in the world, but if you can’t stand him, it won’t work. Likewise, he could have a brilliant strategy for complicated off-shore investments, but it won't work if you’re looking to play it safe. Working with an advisor is a personal relationship experience, which means that you need to click with him both philosophically and personally. You don’t have to agree on everything and you don’t have to be best friends, but you do need to be coming from the same place and you need to share some of the same values.don't pick just anybody
Picking the right financial advisor can and should be a relatively difficult and laborious process. While these tips will help you sort through the less-than-stellar candidates and spot the real gems, the truth is that there is no substitute for the hard work required in finding and interviewing the right people. It’s your money, and a healthy round of research will help you make the most of it -- You only get one shot at picking the right financial advisor.Resources:
http://www.fool.com/news/mft/2005/mft05060105.htm?npu=y
http://www.fool.com/retirement/retireeport/2001/retireeport010416.htm - Retirement
http://www.wiseradvisor.com/university-article~artId~122~title~before-picking-a-financial-advisor-ask-the-right-questions.asp
http://www.freemoneyfinance.com/2005/07/how_to_choose_a.html
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