Do You Need a Financial Advisor?

Many people associate financial advisors with the very wealthy, and it is sometimes assumed that people who are not high net worth individuals should manage their own finances. However, there are so many moving parts in an average financial picture that it can be challenging for even those who are financially savvy to keep track of on their own money without outside input from time to time.
Not only do you have household expenses and income, but tax issues, saving for college or retirement, insurance, debts, credit, and other matters that require budgeting. In addition, there may be unforeseen events that can be a strain on your finances or a happy occasion such as a wedding, or an addition to the family. There are also major decisions that need to be made such as whether to buy or sell a home or start your own business. Sometimes it takes an outside viewpoint to help you organize your finances and make decisions about your future.
What Do Financial Advisors Do?
Financial advisors and planners help you get a hold of your financial life, make organizing savings and earnings more efficient and can help you save for major life changes such as your children’s college education or retirement. There are many types of financial planners depending on what kind of services you need. Some advisors such as Don Gayhardt can help devise strategies for wealth creation and growth. Others help you make the most of your tax deductions and give you a hand with financial planning. There are advisors who deal mainly with younger clients who are just starting out in life or help retirees grow their nest egg. The type of financial advisor you hire depends on your circumstances and your financial goals.
Choosing a Financial Advisor
Once you have decided on what kind of financial advice you need and what your long and short-term goals regarding money are, you will have a clear idea of what kind of financial advisor is right for you. You may already get advice from an accountant, for instance. Certified Public Accountants or CPAs are financial advisors who help you out with your taxes. Some provide additional advice on how to create a budget for manage money, but many accountants confine their focus to tax issues.
If there are several financial matters you want to take care of such as dealing with debt, saving for retirement and financing a new home, it is a good idea to look for comprehensive financial planning company or an individual that has a multifaceted approach to dealing with financial issues. A firm has the advantage of having multiple employees with specialties in specific areas such as insurance, tax planning, and investments. However, some people prefer the personal attention of an individual financial advisor who can get to know you and your financial objectives over the course of years.
A good way to find a financial advisor who is right for you is to get recommendations from friends or family who have benefited from financial services. You may also ask your Certified Public Accountant or lawyer recommendations. You can look at online reviews, but sometimes it can be a better idea to work with someone locally and was recommended by someone you know personally.
Looking at Qualifications
One reason it is better to choose a financial advisor who is associated with a reputable firm or was highly recommended by someone you know in real life is that it is relatively easy for people to pass themselves off as financial advisors without having credible credentials. Unlike CPAs who have to have a license in order to work in that category, anyone can call themselves a wealth manager for a financial advisor.
You should ask to see evidence of qualification and look for actual certification such as a Chartered Financial Analyst for CFA, a Certified Financial Planner or CFP for a Chartered Financial Consultant or ChFC. If you want to with someone who focuses mainly on retirement you can find a chartered retirement planning counselor or a CRPC.
In addition to professional qualifications, you should look for financial advisors who also have ethical obligations. Your advisor should be held to fiduciary standards which require him or her to always make decisions in the best interest of the clients. Some types of financial advisors must adhere to the fiduciary standard whereas stockbrokers only have to comply with a suitability standard, which doesn’t do very much to prevent them from giving financial advice that is in their own interest rather than yours.
Meeting with Your Advisor
When you meet with your financial advisor, the discussion should include the kind of questions that make it clear whether or not it is going to be a good fit. Ask about his or her other clients to see if you fit in with general picture. You should ask about the means of communication between the advisor and client and how often there is interaction. Also, discuss whether or not the advisor works on a fee or commission-based plan.

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