Choosing financial advisor can be tricky, especially when choosing one for the first time. For some of us, there is nothing as dreary as the prospect of spending time with a financial adviser.
But if you know what you want to get out of the meeting – with a financial adviser who is right for you – the outcome can be liberating for you and your money.
Choosing Financial Advisor – Where to Start?
How to find that magical adviser? Trust those around you – ask your family, friends and colleagues if they have a financial adviser they would recommend and speak to them.
Here are some things to look for in a potential financial adviser:
- Are they easy to contact?
- Do they get back to you quickly?
- Do you feel comfortable with them?
- Do they use jargon to show you how little you know (in order to demonstrate how much they know)?
- Would you spend time with them if they were not a financial adviser?
- Are they judgemental?
- Do they listen or talk over the top of you?
The next step is to address YOUR attitudes to money. Ask yourself:
- Do you feel comfortable with your attitudes?
- Are they your attitudes or did you learn them from someone else?
- Have you learnt lessons from experience or advice?
Most people make financial decisions based on emotion. This is perfectly normal.
A good financial adviser will help you separate the emotion and the money. They are powerful drivers when making important decisions for the long term.
Many years ago, I was told that “no one plans to fail but many fail to plan” and it is so true. If you have a plan you cannot fail.
It is important that your plan can be adjusted to reflect changes to your life and attitudes, this is normal as well. When circumstances change, your plan should change.
Who Needs a Financial Adviser?
You don’t need to have a lot of money to use a financial adviser, many clients are on average earnings. If you have a lot of money, the only difference is that you will have more options.
But whatever your circumstances, it’s important to have access to capital at a time of need, not just what is in your bank right now.
How Do You Find a Good Financial Adviser?
Like all other relationships, the quality of advice depends upon how you and your adviser get on. When I meet someone looking for advice I want to make sure that I am the right person for them. I always ask myself these questions:
- Do we have shared values?
- Do I understand how my client thinks?
In my experience, the best outcome happens when we have a common understanding. This is what you should be looking for – a financial adviser who understands your needs. I have known many clients for a long time and they often recommend me to others.
Everyone benefits from a long-term relationship because you don’t have to keep explaining yourself again and again – a good adviser will have a good memory. Check out our handy guide for the 7 Questions to Ask When Choosing Financial Adviser.
What Do You Need to Know About Financial Planning?
Sensible financial planning is using your income to plan for both the expected and the unexpected. It falls under three planning headings.
- Borrowing – how do I borrow money if I buy an asset, maybe a car or a new home?
- Protection – how do I protect myself and loved ones against potential financial disaster? Such as:
- What will happen if you die? How can you make sure your family or anyone who depends upon your income will be able to maintain their standard of living if you die?
- What will happen if you have an accident or contract an illness that prevents you from working? How do you make sure that you can maintain your standard of living and pay for essential outgoings if you cannot work and your income stops? However generous you employee benefits may be, they are probably going to stop at some point.
- Investment – how do I make sure my savings are in the right place for short, medium and long-term planning and benefit?
Consider all the options when you are advised to buy a specific product. Ask yourself these questions:
- Is this product right me?
- Does it fit into my overall financial plan?
Is Timing Important When it Comes to Financial Planning?
Timing is very important because the longer you have to plan the better. But don’t forget short and medium-term planning as well as long-term planning.
It is never too late when it comes to financial planning. The best time to start is now.
How Do I Pay A Financial Adviser?
There are only two ways to pay when choosing financial advisor. The first one is to pay for the advice upfront (this what I offer).
My experience is that people prefer clarity; you pay an agreed fee upfront in return you get advice without clock-watching. This includes emails and calls to other parties if needed.
Powerful people do not make financial decisions by themselves; they have a team around them. My role is to build the team you need and consult other experts and advisers, if and when we need them.
The other way is to have a “free” meeting where the adviser will usually give a free time-limited meeting.
However you pay for a financial adviser, you should ask questions.
Make sure that you understand exactly what is being said and if you don’t understand it the first, continue to ask questions until you do.Powerful people do not make financial decisions by themselves; they have a team around them. Click To Tweet
What Are The Risks For Both Parties?
- If you pay a fixed fee, both the adviser and client will have risks.
The client’s risk is that they pay and don’t feel they have received value for money. The adviser’s risk is that they accept a fee and spend far longer than anticipated on the clients’ behalf.
- If there is no fee
The client risk is that they are advised to buy a product that is not appropriate for their specific needs. The adviser’s risk is that the client does not agree to buy any product and there is no financial gain for the time spent.
What Do I Do Next?
Find the right adviser and understand how to take control of your financial life. Be prepared to spend time on the project. Good luck!
Over to you: Have you met with a financial adviser? What was your experience? Share with us here, we’d love to hear from you!
About the Author
Diane Saunders is a Personal Financial Strategist, Money Coach and Creative Brain. Find out more about her here.