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If
you are like most people, you have a
variety of financial goals: college for
your children, a comfortable retirement,
a vacation home and so on. You might be
able to achieve all these goals on your
own, but you will likely find it a lot
easier if you get a little help from a
financial advisor.
But how do you choose the
right one? For starters, ask your
friends, relatives and co-workers whom
they use. Then interview some of the
people they recommend. What questions
should you ask at such an interview?
Consider these:
-
What are your qualifications? Make
sure you are talking to someone who,
at a minimum, has all the required
licenses for selling securities.
-
What type of experience do you have?
Find out how long someone has been a
financial advisor, but don't rule
out a person with only a limited
amount of experience; a new
financial advisor frequently brings
a great deal of enthusiasm to his or
her work. A financial advisor's
longevity is less important than
whether he or she has had experience
working with someone like you,
someone in your financial situation,
with your goals and your investment
preferences.
-
What is your investment philosophy?
Try to learn if someone favors a
specific style of investing or a
particular class of investments.
These styles or classes may be
well-suited for some investors but
inappropriate for others. If you
believe the person you're talking to
has a one size fits all mentality,
you might want to look elsewhere.
-
How will you communicate with me?
Financial advisors run their
business in different ways, so
there's no one right way of
communicating with clients. However,
you need to feel comfortable that
someone will always be available to
answer your questions, review your
accounts, evaluate your situation
and make appropriate
recommendations. If you are
interviewing someone who has a
partner or an assistant, find out
whom you are likely to be
communicating with, should you
decide to become a client.
-
What services do you provide? Find
out just how a prospective financial
advisor can help you. For example,
some people sell investments only,
while others offer investments and
insurance. Keep in mind, though,
that you don't need to be a one-stop
shopper when it comes to obtaining a
wide range of services. In fact, you
might want to ask a prospective
financial advisor if he or she has
developed working relationships with
legal and tax advisors. This team
approach can be quite beneficial to
you, especially when you get into
the area of estate planning.
-
How are you paid? Financial advisors
get paid in several different ways:
fees, commissions, salary or some
combination of these methods. One
way isn't necessarily any "better"
than another, from your point of
view, but you should have a clear
understanding of what type of
compensation is being used.
Your association with a
financial advisor is one of the most
important business relationships you'll
ever have, so make sure it's a good one
right from the start. |
