Financial advisors or planners are qualified, expert, and experienced professionals who possess sound knowledge in different fields of management including Investments, Insurance, Tax Minimization, Estate, Financial as well as Retirement Planning, and many more to assist clients on a variety of money matters. Depending on the area of their expertise & requirements of clients, they can help them with everything related to finance.
If you are considering hiring a financial advisor and are wondering how to choose the right financial advisor for managing finances, then this blog can help you. We have talked with our financial expert Mr. Ngulminthang Lhanghal who has shared a few essential tips before deciding on financial advisors. What are they? Let’s have a look:
Checklist To Keep In Mind While Hiring A Financial Advisor
1. Do You Really Need A Financial Advisor? - The very first step is asking yourself whether you need a financial advisor or not. Though it can be an added expense, and you can forgo an expert if you know about investing or personal finance, managing your own finances can be a daunting task especially when you have other things to do as it demands a significant amount of time. So, it is better to hire one.
2. Determine The Type Of Advisor You Need - Keep in mind that not every financial advisor is the same. Some are well-versed in investment while others specialize in retirement, saving, or many more things. Figure out your financial needs and choose one that matches your goals.
3. Seek Reputed Financial Advisors With Good Record - Ngulminthang says that a qualification certificate is an indicator that you are going to work with a capable professional to manage your finances. Make sure that they are certified financial advisors and if they are, check what types of credentials they have as some easy-to-obtain credentials make people appear as an expert with no proper knowledge. Also, don’t forget to take feedback & reviews from past & existing clients.
4. Interview Them - Avoid hiring a financial advisor without interviewing or asking enough questions. It will help you validate their capabilities and area of forte. The questions can range from their past working with clients to the complexities regarding government regulations.
5. Know Compensation & Fee Structure - Another important area you should be attentive to is knowing their fees and how they will be compensated. The fee structure varies for every advisor and there are numerous ways they charge for their services. Generally, it includes an hourly rate, a fiat or fixed rate for a specific project or it can be based on commission. It is essential to know all the possible aspects of compensation.
6. Check Their Offered Services - Regardless of the type of financial advisors, they should be able to provide a comprehensive range of money management services to their clients, not just tips on best investment plans, Lhanghal says. He/she should be fully aware of your financial plan, goals, & current stability including net worth, cash flow, assets & liabilities, & current investments, etc. so that they could advise you better accordingly and help you achieve your goals.
7. Check Their Area Of Focus - Remember that the respective financial advisor should be active in taking decisions in your best interests. If they are only interested in selling or distributing your financial products without paying attention to your needs, they are just earning their commission, nothing else. You need to hire someone who can invest their time & efforts to understand & assess your wealth.
8. Know When You Need Financial Advisors - It is important to know when you need to hire them. The sole purpose of hiring them is to help set & achieve your financial goals and if you are not so good at it or don't have time for it, it is the best time to hire financial advisors.
9. Learn Identifying Fraud Risks - There is an increased possibility of fraud when any other person holds all your assets. Reputable financial advisors will hire a third-party custodian to hold your assets so that you can stay stress-free regarding the transparency of the ongoing process.
10. Figure Out Conflicts In Interest - You need to be clarified with the financial advisors regarding compensation or fees to be paid as well as potential risks and how will they manage your investments to fulfill your goals etc. It will eliminate conflicts of interest in the future.
According to our financial expert Mr. Ngulminthang Lhanghal, hiring a financial advisor is a big decision that needs to be carefully taken. Give these points a thought, do your research, and come up with an informed decision.
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