Wednesday, October 12, 2011

Essential Questions to ask before hiring a financial planner


Being buried deep in debt can be a most unpleasant situation for anyone. It may even come to a point when you will need professional help to get your finances back in order. However, making this decision is not as easy as it sounds. Hiring a financial planner means stretching your limited financial resources to the breaking point.
You have to make sure that the financial planner you hire will provide you with 100% honest services and excellent money management tips. Getting a financial advisor is no joke because it means investing lots of trust and confidence in someone who will help you run your financial affairs more smoothly.
Besides, financial advisors are called in not only to help people manage their debts, but also to prepare for the future, such as retirement. That means that you open up more than just your financial portfolio to your advisor—you also let him in on your family history, plans for the future and personal priorities.

One big decision

You can interview as many people as you want, but this process alone will not guarantee that you will get the best possible financial planner. The job is a highly technical and specialized one, which may mean that you are at a disadvantage even as you try to inquire whether or not this person is the right one for the job. Very few of us have the level of expertise that financial planners have, and asking them questions can be more than a little intimidating at first. If we had their knowledge and skills, we wouldn't need their heolp in the first place.
We don't want to look like we don't know anything about money, so we may have the tendency to limit our questions to mundane matters. Inquiring about prior work history, references and affiliations are all right, but we must certainly go further than that. Asking the right kind of questions will allow us to determine if a particular candidate is the best financial planner for us.
Include the following questions in your checklist when you interview your first batch of potential financial advisors:
  1. Who is your ideal client? Finding an effective financial advisor means getting someone who understands your current age, work, stage in life and asset level. Perhaps you are already planning to retire in a couple years' time, which means that you need someone with sufficient experience in working with people who are about to retire.

  2. How are you compensated? Ascertaining how your advisor is paid will help you find out if he will be loyal to you in the long run. A fees only arrangement means that you pay him directly for his services and advice, while a commission-based advisor might consider his monetary interest first before he gives you any advice. Payment for your financial advisor's services should also be clearly stated in your final contract.

  3. Are you married? Having a family means that your financial advisor is keenly aware of the realities of juggling various different expenses all at the same time. You want someone who can empathize with you and really help you work through financial problems one by one. Another way to look at it is that your planner is exposed to different aspects of your life, so you should at least know basic details about his life as well. On the other hand, a planner with rocky family life may be too distracted to provide you with quality advice all the time.

  4. Will you be the only person working with me? Some financial advisors work personally with their clients while others have an entire staff to attend to small details that don't require too much discretion and confidentiality. Ask the candidate if he plans to bring in outside help such as lawyers, tax accountants or insurance agents so you can check on their individual backgrounds as well.

  5. How many clients do you have? Just like in any other industry, some financial planners are in it for the money. Thus they may have the tendency to bite off more than they can chew—taking in too many clients and accepting too many accounts at any given time. This can significantly reduce the level of quality of the services your advisor can give you, especially if he is working solo. It is better to work with someone who has just a few clients under his wing because he is the one who has the most time and attention to give every account.
This article was written by Will from Life Insurance Finder. Visit Life Insurance Finder to compare life insurance quotes.

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