Your Guide to Hiring a Financial Advisor

by James Hendrickson
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accountant-1238598_640 Managing money isn’t always the most fun of tasks, but it’s a necessary part of life. Financial planning is about more than budgeting for groceries and mortgages. There’s a lot that goes into creating strategic financial schemes designed to help you make the most of your wealth. If you’re considering the help of a financial advisor, take the following aspects into consideration.

Is the Timing Right?

There are numerous life events that call for the help of a financial advisor. If you recently got married, you’re likely confused about merging your accounts, may have questions about liabilities regarding your partner’s finances, and could be confused about your new tax filing responsibilities. Perhaps you’ve started a new business. Learning how to handle taxes related to a startup on your own can feel akin to torture; just ask entrepreneurs that have come before you. Talking to a financial advisor when taking on this type of responsibility is a good idea. Other life milestones that might precipitate the need for a financial advisor include the arrival of a new baby or adoption, purchasing a home, or inheriting or winning a large amount of money.

Choosing the Right Financial Advisor

A financial advisor is an umbrella title that can include a variety of finance professionals. From investment managers to financial life coaches, wealth managers to financial analysts, all of these titles can be considered a financial advisor. It’s important to determine what exactly you’re looking for in a finance professional for your personal aims. Need a financial analyst to help you determine the best ways to expand your business? You may want to consider hiring a Chartered Financial Analyst. These individuals have received a prestigious charter from the CFA Institute. This designation is only given to individuals that have completed extremely rigorous study programs using CFA guides, often taking years to pass a single exam. This designation signals that they’re more than qualified to help you analyze current markets.

In need of tax help? Hiring a CPA might be your best option. Certified public accountants help prepare taxes, and sometimes provide financial advice. Consider a CPA if you’re struggling with tax liabilities or you’re unsure about how to file with your current financial situation.

Perhaps you’re looking for a financial planner for your personal investments. In these cases you may want to hire a Certified Financial Planner. These individuals are certified by the Certified Financial Planner Board of Standards, Inc., and they’re legally bound to acting in your best interest. This standard makes CFPs the best choice for looking for a reliable wealth manager.

How Much Will It Cost?

The cost for financial advising services can vary based on numerous factors. However, you should be prepared for the costs to be steep. Hiring a financial advisor isn’t an inexpensive endeavor. If you’re looking for a comprehensive financial plan, it’s likely you’ll pay upwards of $1,500. If you’d like to keep your advisor on a retainer to receive continued advice, you’ll need to pay several hundred dollars, often on an annual basis. In contrast, fee-only advisors charge a fee based on the percentage of money you’ve invested. Most financial advisors generally charge a one percent fee, but there are exceptions that will see you spending more or less. You may also encounter financial advisors that work for investment companies. These individuals can provide sound advice, but it’s important to understand that they earn commissions on any investments you buy into. A trusted, reputable advisor in this situation won’t lead you astray, but there are situations in which their vested interest in personal gain can see you pouring your money into poor investments.

Financial advisors are often more than worth the investment. Organizing your finances and creating a plan for a healthy financial future is easy with the help of the right professional.

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