Presently, people are bombarded with products, packages, services and other seemingly necessary things that all are pressured to get and buy. Some opt to have financial advisers to solve this problem. But how can you be sure that your financial adviser is giving you what's in your best interests?
Here are some tips on choosing a financial adviser:
Know what your needs are. First, it will be better for you if you clearly understand what you want a financial adviser for. It will also help you know what kind of adviser to look for so your situation can be specifically addressed. Through this, you can also list down what you already want so that unscrupulous financial planners won't be able to fool you.
Ask about experience. How long he/she has been in practice and what companies he/she has worked for or has been associated with may give you insights on what kind of advice he/she can give you. A good financial adviser should also be able to relate past work experiences with his/her current practice. It is also recommended that you go with a Certified Financial Planner (CFP) because you can take it as an indication of credibility, but keep in mind that it is not a guarantee.
Inquire about his/her approach to planning. Some financial planners prefer understanding all of your goals and developing one plan to reach it while others create plans for specific and individual areas. Also look out for the word "fiduciary", this means that a planner is absolutely required to act on your best interests. Those who are not fiduciary, or in other words act on a sustainability standard, are most likely to sell you what is merely suitable for you, not what is in your best interests.
Understand the planner's pay structure. Advisers can be paid in different ways such as a salary, commission, hourly or flat rates, or a combination of fees and commission. It is best to choose a financial adviser that is paid hourly. Those who are paid based on commission might tend to steer you in a particular direction just to get commission from the financial products he/she will sell you.
Run a background check. Ask about his/her previous records. Find out if he/she has ever been publicly disciplined for unlawful or unethical actions in his/her career. Also, check up on the claims made about his/her credentials if they are true or current. CFP advisers have discipline records under the Certified Financial Planner Board of Standards, Inc. which you can check anytime.
Have it in writing. Document whatever has been agreed upon and ask for a written agreement that includes details of the services he/she will provide you with for future reference. When choosing a financial adviser always be mindful of selecting one who fits your needs and financial situation.