financial adviser

How to find a good financial adviser


It’s no secret that we all desire to be financially secure. Whereas our levels or degrees of what we consider to be financial security may differ, the goal is the same. We want to have enough money to educate our children, buy a home, and go on family vacations, as well as have a sizeable retirement package for the time we are beyond our productive years. So what does it take to achieve all this? The answer is financial planning.

Financial planning can broadly be described as the active and deliberate process of making sound decisions about your money to enable you achieve your life goals. This may range from investing in life insurance, a pension plan, buying a home, putting a will in place, and having a more organized spending, just to mention a few. To do all these, you will need the help of a financial advisor.

You have two options when choosing a financial adviser. You can opt to work with a company or independent financial advisers sometimes referred to as an independent financial planner who is essentially working on their own and not affiliated with any company.

This article seeks to focus on independent financial advisers and offer you a couple of pointers on how you can find a good one.

You need to have a clear understanding of the nature of the service you want

When looking to choose an independent financial planner, it will be good to be aware that this industry is big and so for effectiveness, different service providers will specialize in specific services. It’s virtually impossible to find independent financial advisers offering all types of financial services. Truthfully, you should be very sceptical if you come across one who does. It’s therefore important for you to have a clear understanding of the nature of the service you want so that you can choose an independent financial planner with the competencies you are looking for. For instance, finding one who specializes in investments if that is the kind of advice you are interested in.

Ensure the independent financial planner has the right credentials

When it comes to financial planning, you can’t afford to drop the ball. It should be your sole purpose to ensure that you properly vet and do your due diligence on all the independent financial advisers who will come your way applying for the job. In this case, their credentials will be key. You want to ensure they have the right legal and professional documentation that qualifies them for the job. For instance, an independent financial planner must have a Certified Financial Planner (CFP) certification whereas an investment advisor must have a Chartered Financial Analyst (CFA) certification. These are just some of the credentials they must provide and you must be familiar with how they look so that you can distinguish fakes from legit.

These credentials are usually acquired after independent financial advisers have passed the relevant examinations that demonstrate their proficiency on these subject matters.

Learn how these financial advisors earn their pay

Independent financial advisers are in a profession like any other therefore, they are entitled to pay just like any other professional. It’s therefore important for you to have a clear understanding about how their various pay structures work so that you can know whether it makes financial sense to you. For instance, the common pay structures currently in the market include hourly rates, commissions or having an asset based fee. There are also terms like fee-only advisors and non fee-only advisors and these are terms you must be able to understand and differentiate and see how they relate to the services that they offer to you. All in all, there isn’t anything wrong with any of these payment methods, it’s all down to which payment method works for you in the long run with minimal impact on your bottom line.

Protect yourself from potential risks

When working with an independent financial adviser, you must be fully aware of the industry best practices that have been put in place specifically to reduce potential risks of financial loss. Case in point, in many scenarios where investors have lost money to fraudsters, it happened because investors had given custody of their money and assets to these so called independent financial advisors who ended up swindling them. As a system of security to avoid such cases of fraud, a good advisor is meant to guide you on how to deposit your money and assets in the custody of a third party which is often a large and well known company that specializes in this area. Once this is done, your advisor will be free to make any transactions using your account but will not have direct access to your money or assets. It’s the custodian who will be ultimately responsible for reporting the transactions to you, verify signatures, and so on. Do your due diligence to ensure that the independent financial planner is not affiliated in any way with the custodian.

Look for referrals from other customers

From a conversation and perusing through documents, you may not be able to get a clearer picture and a proper background check on a potential independent financial planner, this is where customer referrals become important. You can opt to look for these referrals on your own or request the advisor to give you their client list so that you can get to know more about them, their work ethic, experience, success rates and so on. A legitimate advisor should have no qualms giving you this information. The internet may also be a good source of this information because if there are complaints about an advisor in the industry, chances are high this information is online.

Well! There you have it. Your how to guide on finding a good financial advisor. Keep all these 5 points in mind and we can guarantee you that your money and assets will be in good hands as you work towards building a more financially secure future not only for yourself but for your family as well.

We welcome your thoughts, comments and feedback on this article.