Individuals want to grow and preserve their wealth. However, they may find this task overwhelming and decide to seek the help of an experienced professional. With many wealth management options available, how can an investor know which financial advisor to choose? The following steps help simplify this process.
Recognize the Need for Help
Before comparing wealth management options, a person must determine what type of help they want and need. Some individuals wish for help with investing, while others need assistance with personal finance. Many people want to reduce their tax burdens and need an advisor who can assist with tax strategy and planning. Every person should have a retirement plan in place for the day when they no longer want to work or find they can no longer do so. The right advisor will help these individuals plan for the future, so it’s essential to see this professional before they are needed.
Questions to Ask When Comparing Providers
All financial advisors are not the same. Look for a fiduciary, as they must prioritize the client’s interests over their own. They are required to share information about any potential conflicts and the compensation they receive for their services. Not all financial advisors are bound by these fiduciary standards, and a person must know this up front. Furthermore, learn whether the Securities and Exchange Commission regulates them. Any advisor managing more than $110 million will be subject to this regulation. Finally, learn whether they have local offices or if all services are provided online. Many people prefer meeting with someone in person, while others are comfortable handling all matters online.
Payment
A person looking to grow and preserve wealth doesn’t want to spend a fortune on a financial advisor. Commission-only and fee-based advisors are two options. Robo-advisors are the least expensive option and require a smaller initial investment. For those who want a dedicated human advisor, the portfolio minimum is often in the hundreds of thousands of dollars. Consider all options based on the portfolio size to receive the needed help without overpaying for these services.
Choosing an Advisor
Ask family and friends for recommendations when looking for a provider. Talk with co-workers and acquaintances to see if they can recommend someone. However, each person’s financial situation is unique, so the right advisor for one person might not be appropriate for another. The National Association of Personal Financial Advisors and the CFP Board are two independent resources to use when making this choice.
Meet with a few advisors to find the right fit. Learn about their background, experience, and certifications. Check FINRA’s BrokerCheck to see if they have any disciplinary actions or complaints, and learn about the fee structure and possible conflicts of interest. The more a person knows, the easier it is to make the right decision.
Once this choice has been made, sit down with the advisor for an initial consultation. Discuss your short- and long-term financial goals to learn how they can help. This discussion should include more than just numbers, as the advisor needs to understand your intended use of the funds, the acceptable risk level, and other relevant details. If you feel comfortable with this person, consider hiring them. Forms must be completed along with legal paperwork. Once these steps have been taken, the wealth management process begins. You will work together to achieve the established goals and watch your wealth amass.
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