Financial planners advise clients on how best to save, invest, and grow their money. A good financial advisor can make a substantial difference in improving the quality of life you have as you grow old. So it’s very important to settle for a good one. However, selecting the right financial advisor-planner is not an easy task and a person may have to look at several important factors while selecting the right person to handle his finances over several years.
The first step is to understand what financial planners are supposed to do. They should understand your requirement and then put in place a financial plan based on your needs. They should not only draw the plan but also educate you on it and help you in executing it. They should also review your plan periodically so that it case the investments swing off the plan, they can bring it back on track.
The next step is to evaluate the professionalism. Some advisors sell you investment vehicles primarily because of the high commission payments they receive. An advisor should act solely in the best interest of the clients. Thus, one should see if the advisor is qualified and has the required credentials.
It is important to interact with the prospective advisor. During the interaction , one should ask several questions like what sets the person different from other planners, the advisory process that the person follows, how he evaluates investments and monitor them, how he updates his clients about the market performance, regulatory changes etc.
Experience of the financial planner is also an important factor. Unlike investments, for which past performance may not be a good indicator of future performance, a financial planner can be judged by their past performance. One should look for a minimum experience of five years. Experienced advisors not only have a better understanding of the ups and downs of the markets but also better sense of judgement. Avoid advisors who boast of superlative performance or those who `guarantee’ unrealistic performance,
Not all financial advisors have the same level of training or will offer you the same depth of services. Thus, when contracting with the advisor, do your own due diligence and make certain that the advisor can meet your financial planning needs. Check out certifications before engaging the advisor. Make certain that you understand and agree with the fee structure and approach of your financial advisor.