The decision to trust someone with your hard-earned money is very personal. Since you’re basically hiring someone to provide expertise that you don’t have, it can be tough to sort the good expertise from the fluff. Whether you’re looking for a financial advisor on your own or are referred by your loving uncle, consider these five criteria before you begin your relationship.
1. Customization
Your needs are unique—and your investment strategy should be, too. Make sure your advisor takes the time to understand your personal goals in order to recommend a customized plan that aligns with your risk tolerance. For example, your advisor may select investments that earn less in your portfolio yet make you feel more comfortable.
2. Compensation
Consider an advisor who charges a fee for services rather than commission-only from sales of stocks, insurance or other types of investments. This can be an hourly fee or a percentage of your portfolio. It helps ensure that he or she is working to grow your investments, not profiting primarily from sales.
3. Experience
While it’s a good rule of thumb to look for at least three years of experience working as a financial advisor, be sure to ask what type of investing with which your advisor is most experienced. If they answer “active trading in equities” and you’re looking for a conservative financial plan (or are about to retire), it may not be a good match.
4. Investment Approach
Every investor is unique. So make sure your advisor’s investing philosophy isn’t too conservative or aggressive for your investing style. Also, be sure to check their assumptions when projecting rates of return—if they seem particularly rosy (e.g., 15% with an inflation rate of 2%) it’s not very realistic—it might not be very realistic and/or attainable for the long-term.
5. Accessibility
Regardless of how much you have to invest, your financial advisor should be working with your best interests in mind. Even if you prefer to meet only quarterly or even yearly to discuss your portfolio, if you have questions, your advisor should always be available to give you answers. If they don’t return your calls, it may be time for a change.
For more information on the benefits of working with a CFP® professional, call Tod Shoffler, CFP®, Wealth Advisor with Crest Wealth Management at (609) 522-6098 or email tod.shoffler@lpl.com. With over 20 years of financial planning experience, Tod can put you on the path toward financial freedom.
*Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.
Not FDIC Insured; Not Bank Guaranteed; May Lose Value; Not Insured by any Federal Government Agency; Not a Bank Deposit.
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