If you’re to the point where you’re ready to put your money to work for you, it’s not the best idea to go it alone. This is where a quality financial advisor can come into play. Here are four tips on how to choose a fantastic financial planner.
1. Know the Difference Between an Advisor and a Stock Broker
Choosing to work with a financial planning company is different than choosing a stock broker. Sometimes stock brokers will spin themselves as financial planners, but in reality they are just trying to get you to buy stocks.
Check to see if the person you’re dealing with is a Certified Financial Planner or CFP. This requires licensing and going to specific classes on financial planning. You want someone to help you plan out your strategy from a comprehensive perspective instead of just someone to sell you stocks.
2. Consider the Fee Structure
If you’re looking at an independent financial advisor platform, one of the first things to look at is the fee structure. How is the advisor compensated for their work?
If they work on commission, that probably isn’t the best fit, as they’re inclined to get you to buy and sell stocks frequently. In many cases, finding one that charges you by the hour is the best option.
3. Run a Background Check
Running a background check on your prospective financial advisor is a good idea. This way, you can tell if they have ever been convicted of a crime or if they’ve ever been under investigation for anything. If your potential financial advisor was under investigation for fraud at one point, for example, you might want to take a look elsewhere.
other valuable tips:
4. Don’t Fall Victim to Hype
A lot of financial advisors will promote how great they are at beating the market or achieving amazing returns. While it’s not impossible to beat the market, it is highly difficult. The better approach is to go after slow and steady gains with the market. If you have someone talking about how great they are at beating the market, you should probably turn around and run the other way.
Overall, there are a lot of financial advisors out there competing for your business. Make sure that you pick one that’s a good fit for your financial goals and plans.
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