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Finding the RIGHT Financial Adviser for YOU
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It’s important to know what you want from a Financial Adviser. Do you want the Financial Adviser to be responsible for all of your financial affairs such as managing your investments, preparing an estate plan and its associated documents (wills, trusts, enduring power of attorney, etc.), handle your insurance, or even do your income tax? At the other extreme, do you just want to hear a different perspective and get some suggestions?
It’s also important to remember that the kind of service you want may mean a very long term association from which it may be difficult to extract yourself, particularly if the Financial Adviser has invested your money in funds not available to the general public or if the Financial Adviser retains virtually all of your records. If you have some amount of financial knowledge, you might choose to use a Financial Adviser as a consultant only. In that case, your questions can be simpler with a focus on the responses you get from the Adviser’s references using a similar service. You’ll also find what you may get for the Adviser’s charges.
When you are in the market for a Financial Adviser, here are some questions that might help you make the right decision for your situation.
1. How old are you? If you are older, you may want a younger Financial Adviser who will outlive you. If you are young, you may want an older Financial Adviser who has been through difficult economic times.
2. What is your educational background? Look for a Certified Financial Planner (CFP), or degrees with financial planning specialisations have suitable qualifications as well. Avoid brokers, insurance agents, real-estate promoters, business associates, relatives, golfing partners and hairdressers.
3. How long have you been a Financial Adviser? Experience counts a lot in the financial field, especially the experience gained in periods with plunging markets.
4. Do you accept fiduciary responsibility? This is a legal term meaning they have a fundamental obligation to provide suitable investment advice and to always act in your best interests, not theirs. They should also be willing to give you a written statement that they accept this responsibility.
5. What is the smallest, average and largest portfolio you manage? Some Financial Advisers only take high-net-worth clients. That may not be suitable for you.
6. Who else supports you in the business? You will want to know the number and skills of other practice staff; whether this is a stand-alone firm or part of a large company; the amount of money they have under their control; the kind of clients they serve; and who will help when the person you are interviewing isn't available.
7. If you use specific individuals or firms to assist such as an solicitor, accountant or mortgage broker? Ask the questions above about them as well.
8. How much do you charge for your service? Do you offer different levels of service? It’s very important to understand what you are getting if you decide to turn your financial affairs over to someone for a fee. Many Financial Advisers offer different levels of services depending on your needs and wants.
9. Do you have different models or investment products dependent on client’s risk tolerance or preference? Many Financial Advisers are restricted to recommending products that are provided from an associated company. Is the Financial Adviser able to choose to most suitable product from a broad range of investments? Some firms provide tailored portfolios and others provide model portfolios which are more standardised based on the level of risk you are willing to take.
10. How often do you evaluate my situation, goals and objectives? A satisfactory answer is yearly. But many firms have different levels of service packages that can provide for more frequent reviews.
It really pays to do due diligence to find a Financial Adviser. It’s much like a marriage in which separation or divorce may be difficult. Finding a good Financial Adviser is more difficult than finding a good doctor, but the relationship will be truly rewarding.
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The advice is general in nature only and does not take into consideration your financial situation, goals or needs. Before making any investment product decision you should obtain a copy of the product disclosure statement. Please seek advice prior to acting on this information. This article was originally produced by our dealer group at Matrix Planning Solutions.