What is a financial Advisor?
Financial advisors, planners, wealth management advisors and retirement planners are all terms for the same profession-someone you hire to help you mange, plan, and understand your options for your retirement funds such as 401k, social security, IRAs, pensions, and any additional income you may have. They are commonly employed by banks and investment companies to help you manage the assets you have with their business. They play an important role for many Americans as the time and research required to understanding the financial world is extensive and not everyone has time to manage it themselves.
3 things to look for in financial advisors
Ideally, your financial advisor should have a CFP. This certificate of financial planning means that he or she is upholding a recognized standard of excellent practices for competent and ethical financial planning. This certainly isn’t to play down the importance of other degrees and qualifications but being certified by the CFP board is certainly the thing to look foe.
Ensure your financial planner is a fiduciary! This is definitely something you want to research when looking at financial planners as only fiduciaries are legally requires to act in your best interest when it comes to your accounts and investments. Fortunately, starting in April 2017 all financial advisors must act in this manner with regard to your retirement accounts. This may not include all of your assets however, so in order to ensure that your advisor is not selling you products that grant him or her best commission you should seek out a fiduciary.
Ethics. The field of banking is notoriously corrupt in modern times, that is why in this industry more than most, it is important to investigate the ethics code by which your financial advisor operates. This can often be found on the company site or on the advisor’s own page. IT is important that the advisors adheres him or herself to a code of ethics because being a fiduciary does not protect you from everything and people can still bend those rules.
So do I need a financial advisor?
You don’t have to be a millionaire to benefit from a financial planner. It is probably worth at least consulting one to see what his/her thoughts are and evaluate your options. Theoretically you could do all of the work yourself and avoid any fees associated with the management of your account, but the financial services and retirement industries are full of jargon, regulation, and detail which can be quite a challenge for the layman to wade through. Ultimately it comes down to ow much time you are willing to spend, how much money you are willing to spend and what your investments options and goals are. If you don’t have much money saved or can’t stomach the thought of fees it may not be for you. But if it gives you peace of mind to know that a professional is managing your retirement funds for you then perhaps it is worth the price, and you save time to compared to trying to figure out the financial world yourself. If you do decide to go for it then it may be best to go with someone you trust-like your bank as they have more service to lose if you have a bad experience.
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