A financial advisor will review your total financial picture and offer advice on how to invest money. The advisor will take into consideration income, goals, objectives, and attitude toward financial risk.
A certified financial planner is a good choice because requirements for certification include training, an exam, and continuing education.
Start by make a list of prospects. Ask your friends, co-workers, accountant, and attorney for suggestions. Look for reviews online. You can also check the website of the Certified Financial Planner Board for the names of certified financial planners in your area.
Ask any financial advisor you’re considering about training and years of experience. A four-year college degree in accounting, economics, business administration, finances, or financial planning is recommended. At least five years of experience is preferred. In addition, ask for references. Find out if the financial advisor has a specialty, such as comprehensive planning, insurance, retirement, real estate or taxes.
It’s a good idea to interview several candidates. Most financial advisors offer an introductory visit without charge. Find out what’s involved in developing a financial plan and what the charges will be.
Some financial advisors charge a fee for their work and are called “fee-only” advisors. Others make money by selling you insurance and/or securities, including stocks, bonds, and mutual funds.
A financial plan could cost $1,000 to $3,000 or more, depending on what you want covered. Hourly charges range from $200 to $400 an hour. Ask to see an example of a plan the financial advisor has prepared. Make sure the plan covers retirement planning.
Some financial advisors now are charging a percentage of your portfolio, such as 1 percent.
You need to be thorough in your research because anyone can call himself or herself a financial advisor. There are no state or federal requirements for registration or licensing.
If the people you’re considering sell securities, check to see that they’re registered with the state and the federal Securities and Exchange Commission.
The financial advisor you select will be helping you manage important financial resources. You’ll be giving him or her intimate details about your life, including how much money you make, how you spend it, and what your goals are for the future. You need to find someone you’re comfortable with and someone whose advice you trust.
While the financial advisor’s job is to set out a recommended financial program, it’s the client’s responsibility to determine if that plan will meet his or her needs. You’ll need to decide if the recommendations fit with your goals and what you want for your retirement.
Something new in the financial planning field is Robo-advisors. Robo-advisors are computer-based services that help you select and manage investments. They have low fees and varying account minimums. Most companies offer the opportunity to talk to a human if you have questions. The fee usually is 0.25 percent to 0.5 percent of your assets annually. Among the top firms are Betterment, Wealthfront, Ellevest, Charles Schwab, and Vanguard.
I’ve worked with four financial advisors, and I thought two were good. One recommended investing in plants grown in Hawaii, a $10,000 investment that didn’t pan out. Another picked out a set of investments when I rolled my IRA over that didn’t perform well.
I tried a Robo-advisor recently to rebalance the part of my portfolio that wasn’t performing well. The investments seem to go up a little, then down a little. I have a new financial advisor, so I’m going to see what his recommendations are for my portfolio.