Financial planners advise clients on how to save, invest, and grow money. They can help tackle specific goals such as helping you buy a house, or give you advice for handling your money and your assets. Some advisors even specialize in retirement or estate planning, while others offer a wide range of services. Don’t confuse financial planners and stock brokers. They also are different from accountants and insurance agents. Anyone can manage their finances but that doesn’t make them an expert. So here are some tips for finding the best one.
Should you use one?
Anyone can manage their own money. Like, for example, you can manage your finances for home or car repairs or invest money for your savings. However, mastering your personal finances requires patience, and hours of learning. If it’s not worth your time and effort, then you need a financial advisor. They also will help you remain disciplined about your financial goals. They help make you the right moves with your money and keep you on track.
Learn the difference between financial planning and investment management
Some planners have financial planning services but not financial investment services. Others have management investment services and provide little in the way of planning services. What your financial planner will be depends upon your goal. Most planners are fee-only, which means their own revenue comes from their clients. They accept no commission and pledge to do what is best for their clients at all times.
Consider the pay structure.
Avoid commission-based planners. Those who work on commission have less than altruistic motives to sell you a particular investment product or mutual fund if they are getting a cut of that revenue. Fee-based ones aren’t that perfect either. Planners who are earning 1% of your annual assets will not encourage you to buy a large investment or buy a big house, even if it is the right time in your life. This is because their fee would shrink if you did that. If you’re just starting out, a planner who gets paid by the hour is the best choice. They are there when you need them and you’ll only pay for them if they work for you. They are just starting off but that also means they will do their job right.
Run a background check
Check whether the person you’re considering has been convicted of any crime or has been investigated by any regulatory body or investment-industry group. Ask for references of current clients whose goal matches yours.
The best ones have credentials