Do we really need financial advisors? Is money really that hard to manage? Well, the answer to these questions is both yes and no. Yes, because with the rising number of people caught up in the web of debt, even if they are earning sizable income, is proof that money is the most challenging thing to manage (well, at least to these people); and no, because money is not the issue when one is caught in debt, it’s the spending discipline that’s the issue. If one is able to discipline himself with the way money is spent then there is really no need for a financial advisor.
There’s a good reason why you need a Financial Advisor
But say you want to go beyond just spending wisely; say you want to invest a few bucks here and there to build a reliable nest egg; then you would really need a financial advisor on this. Financial advisors are experts too not just in money management but in investments as well. With the recent economy, you can’t rely on just your work and the government to help you live comfortably in the future especially if you weren’t blessed with a lucrative job or profession. There is still a way to build wealth through the help of financial advisors.
How do you find the financial advisor that is fit for your needs? These “must ask” questions will guide you.
#1 – Are you a registered investment advisor?
Be wary when some guys call themselves investment advisor when all they are is an “investment agent”. The difference is that investment agents simply sell you a financial product (something you might not need at all). Make sure that his license allows him to show you investment choices from different companies based on your actual needs and not only by what he can earn from commission on the investment products.
#2 – How much is your service?
Some advisor charges a flat rate for the scope of work that is required; others charge per hour based on on-going consultations. Still others charge a percentage of the total assets under management. But be wary of some advisors that earn a commission on each investment product sold to you, this may simply stir your original investment plans in a different direction. Earning commissions is not bad at all, but be sure he is able to show you at least 5 competing products and prove how his “endorsement” is a much better choice than others.
#3 – How do you plan on helping me?
This question is tricky but nonetheless important. This will outline his strategies to help you, say, to get out of debt in 1 year or less without very painful bootstrapping or make your investments yield a steady 15% year-on-year starting on the second year. This question will let vagueness out in the way and show tangible results. When he lays out his plans you will get the feeling if they are “right” and “comfortable” for you. If something doesn’t feel right even if it seems like a good idea then be brave enough to let him know so he can adjust his strategies according to your comfort level.
Working with a financial adviser is a relationship much like a marriage; there must be mutual trust and respect. Your advisor must have the sense of advocacy to help you get on your financial track and must be willing enough to see you through no matter how challenging it may seem in the beginning.