How to Pick the Best Financial Advisor for You and Your Family

by Susan Paige
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Now that you are a parent, it is important to start thinking about your family’s future and how you can best prepare for it. One of the most important decisions you will need to make is who to choose as your family’s financial advisor. Picking the wrong advisor could have serious consequences down the road, so it is crucial to do your research and make the best decision for your family.

To find an advisor who is right for you, follow these 5 steps:

1. Look For Educational Credentials

Financial professionals such as accountants and investment managers can help you manage your assets and investments, but only a financial advisor has the qualifications necessary to become a fiduciary of your assets. A fiduciary is required to put your interests first and avoid conflicts of interest, unlike anyone else you will meet with. You can check whether an advisor is a fiduciary by looking for educational credentials like the CFP (Certified Financial Planner) or ChFC (Chartered Financial Consultant).

2. Ask About Their Educational Background

Always ask the financial advisor how much they know about dealing with children’s finances. The average baby boomer will spend around $250,000 on their kids’ education, so you need to work with someone who has experience planning for that type of expense. Furthermore, if your child or children are still too young to start saving for college, you need to make sure your financial advisor is aware of this fact.

3. Look For Experience With Children’s Money

It is important for your children’s financial future that they are able to keep their earnings in a tax efficient manner. Most kids will have multiple sources of income, including part-time jobs while attending school and passive income like investment dividends and interest. An advisor who is not familiar with the needs of children will not be able to help your family take full advantage of these types of earnings.

4. Ask For Referrals

Many parents have trusted friends or family members who have used a financial advisor in the past. It may not be necessary to talk to everyone they know, but a quick survey of others whose children are nearing college will give you a good idea of who to work with. If other parents have worked with someone in the past, they should be able to point out some strengths and weaknesses of their experience so that you can benefit from their knowledge.

5. Get A Trial Run

The best way to see how a financial advisor works is to meet with them for a trial run. They will be able to provide you with some important information about your family’s finances, including how much you have saved so far and if there are any changes that need to be made. This way, you can get a taste of their style before committing yourself 100% to their service.

Learn Your Rights when Working with a Financial Advisor

All financial advisors are regulated by the SEC (Securities and Exchange Commission). This means that they are required to act in your best interests, disclose any conflicts of interest, and provide you with information about the products they are selling.

In addition to the SEC, FINRA (Financial Industry Regulatory Authority) regulates financial advisors and investment brokers. FINRA monitors the quality of work these individuals perform for their clients and enforces compliance with federal licensing standards.

The Bottom Line: You Should Only Use a Qualified Financial Professional

No matter what your financial background is, you should only work with someone who has relevant experience and qualifications. Do your research and ask plenty of questions to make sure you are comfortable with the person you choose. With these tips, you can be sure that your family’s financial future is in good hands.

If the worst happens and you believe your financial advisor has stolen your money or you’ve lost capital due to negligence or fraud, it’s important to know that you can take legal  action. The SEC offers a guide to filing a complaint, and FINRA has a wealth of resources for investors who have lost money.

Related Read: Financial Security 101 For Newlyweds

It all starts with the first step

From looking at educational credentials to getting a trial run, these five steps will help you find the best advisor for your family. If you are not comfortable with your advisor, it is in your best interest to meet with someone else.

If you follow these 5 steps when looking for a financial advisor, you will be ensuring that you and your family have competent and ethical professionals guiding the way toward a securing a bright future for you and your family.

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