Hiring a financial adviser is a very important decision for investors. On January 5th, the Atlanta Journal-Constitution (“AJC”) published an article giving several suggestions about hiring a financial planner or financial adviser. The article recommends that the investor stay focused on the goals he or she has set out and to hire an adviser that can give proper advice relative to those plans.
Getting recommendations from trusted friends and associates can start the process off right, but the AJC suggests doing further homework and research. There are several types of advisers, and not all of them have the same education and training and they are often subject to different standards and rules. For example, Certified Financial Planners must have a minimum of three years’ experience and have passed rigorous exams. Furthermore, CFPs must adhere to ethical standards. Certified Public Accountants have a similar background but primarily handle tax issues. Other special designations include: Chartered Retirement Planning Counselors and Chartered Financial Consultants. Those who specialize in retirement planning hold the CRPC; similarly, those who concentrate in financial planning hold the ChFC. Many advisers are brokers at brokerage firms that hold securities licenses granted by securities regulators. Investors should carefully consider what services and standards of conduct they should expect in choosing an adviser. Investors should also consider checking with state regulators to investigate whether the adviser has a history of client problems or complaints.
Another important criterion in choosing an adviser centers on how that adviser is compensated. They can be paid by commission, or a flat fee only, or a fee based on commission. Fee only advisers make up only a small percentage of advisers. Investors should also consider whether the adviser has account minimums before that adviser will take the account.
With all of these considerations in mind, the AJC recommends to build trust with the adviser by receiving a free consultation and asking lots of questions. Choosing a financial adviser is one of the most important decisions because that adviser manages your money. Keep in mind all of these factors before making the final choice.