For most people earning a modest income, getting the service of a financial planner in managing their money is one step towards the right direction. The financial planner will look at the whole scenario including retirement planning, insurance needs, and estate or asset management which most people miss to look into even if they are experience enough about investing.
It is mandatory to learn the basics of financial management even before the actual act of investing and finance assessment, but if you are a person who is so busy or lacking the motivation to study and even just plain lazy just to keep his/her financial knowledge updated, it is best to go looking for a good financial planner.
A good financial planner will definitely benefit a client but a bad financial planner is more concerned in just earning his commissions than acting for the welfare of his client.
Here are some factors that you need to consider in getting the right financial planner.
Fee-based and Commission based Financial Planners
A financial advisor may make his money by earning fees, a percentage of the amount that is invested or value of the portfolio; and he may earn thru his commissions. Those earning fee-based planner won’t have any conflict of interest with their client mainly because he is not commission-based. He won’t offer his client with products that earns a very hefty commission for himself; so it is best to say immediately that you are seeking for a fee-based financial planner.
Always check the actual credentials of potential financial advisors. Ask for recommendation from relatives and friends about their own financial planners. Check them if they are registered or licensed to the Securities and Exchange Commission.
Experience and Qualification
Financial planners with at least 5 years of experience are always better than a neophyte. Furthermore, he should accomplish necessary qualifications to become a financial advisor. Today, the term “financial planner” is being used by many professionals in their given field. Certifications that financial advisors actually have are: Certified Public Accountant/Personal Financial Specialist (CPA/PFS), Chartered Financial Consultant (ChFC) and CERTIFIED FINANCIAL PLANNER (CFP).
But whatever may be his credentials, he must have some experience in financial planning like insurance, investments, tax planning, estate planning and/or retirement planning.
Lastly, financial planners must be easy to work with. And, even if he has the most level of experience and qualifications, but he is not that willing to even listen to the client’s goals and plans, there is not much that he can offer. So, double-check your prospective financial planner before even hiring him/her.