How To Choose a Financial Advisor?

Need help managing you’re your money? Well, if you’re among the many people who find it hard to manage their money, then you certainly need the help of a financial advisor. Lack of personal finance knowledge can end up costing you a lot – a reason why you should find a good financial advisor Sydney. 

Well! Working with a financial advisor is always a great choice for anyone wishing to get their personal finance back on track and set long-term goals and objectives. However, this is only possible with the help of the right financial advisor Sydney. Here are 6 steps to help you find the right financial advisor for all your financial needs.

1. Decide on the Specific Area of Your Financial Life that Needs Help

Before speaking to a financial advisor, you first need to outline the aspects of your financial life that you need help with. This helps in making sure you’re ready to explain your specific money management needs to the advisor. 

Financial advisors provide more than just simple investment advice. A professional advisor will help you develop a chart course that covers all your financial needs. This includes investment advice, debt payments, retirement plans, estate planning and suggestions to insurance products that will help safeguard both you and your family future.  

A financial advisor specialising in retirement plans will come in handy for people with a relatively straightforward financial life, like the young people without significant debts or families of their own. 

However, extra financial assistance will come in handy for people with a more complex financial need. This could be people wishing to establish trusts or college funds for their kids, navigate belligerent debt payment situations, or solve tricky tax issues. Keep in mind that not all financial consultants offer the same menu of financial services. So you have to decide on the needed services that will guide your search. 

2. Get a Better Understanding of the Different Types of Financial Advisor

No law regulates who provides financial advice or calls themselves, financial advisors. This has led to an increase in financial advisor providers. However, not all who claim to be financial advisors have your best interest at heart. Owing to this, you have to be extra careful when evaluating potential advisors. You must ensure you settle for an advisor that is good and worth your money. 

While learning about the different types of financial advisors, you must also understand fiduciary duties. Fiduciary duty bounds some but not all of the financial advisors – meaning they are required by law to work in the client’s financial best interest. Other self-proclaimed advisors are simply held to a suitability standard, which means they can only suggest suitable products even though they might be more expensive and only earn the advisors a higher commission.  

Irrespective of the kind of advisor you hire, make sure you perfectly understand how they earn their money. This helps determine if the advisor’s recommendation is better for you or just for their pockets. 

3. Go for a Fee-Only Advisor

A fee-only advisor earns money from the fees you pay for the services. The fee can either be a percentage of the managed assets, an hourly rate, or a flat rate. 

A fee model approach also helps you land fiduciaries and financial advisors’ services. Such professionals work under a fee-only approach to minimize any conflict of interest potential. Since their fee comes from the clients, they will do their best to ensure clients get a financial plan or financial product that best suits them.

4. Research Thoroughly About the Financial Advisor

Financial advisors exist in many forms and with lots of offerings and specialties. It’s therefore prudent that you conduct extensive research for the potential advisor. Your goal is to settle for an advisor that guides your financial decision and someone that is also trustworthy. 

While conducting the proper research is never easy, you can always start by asking friends, peers, and family members for recommendations. Alternatively, you can choose to go the online way. Many well-equipped financial advisors have set up free databases sites to reach them. Some of the common financial advisors’ free databases include:

• Garret planning network
• XY planning network
• ACP

While assessing advisors, be sure also to consider the professional credentials, fee structures, and backgrounds. Check out their disciplinary actions and the complaints filed against the advisor. Remember, simply because an advisor belongs to a financial planning association doesn’t mean they are fiduciary financial advisors.  

Photo by Amy Hirschi on Unsplash

5. Determine your Affordability

Just like any other financial matter, choosing the right financial advisor will certainly boil down to the cost. It’s therefore important to consider your budget as much as you consider the type of advisor needed. 

There are different ways through which financial advisors get compensated. This includes an annual basis, commissions or investment sold, and hourly or flat rates. Depending on the agreement reached, some advisors can also prefer being paid on both commissions and fees. 

With flat fees, the expert will ask for a certain amount to come up with a financial plan for the client. However, after completing the plan, you will be on your own unless you wish to pay for continued services. 

Annual based fees on assets are usually the most common fee structure for most financial advisors. With this approach, the more assets you possess, the lower the fee. This is an advantage to the client as the more the assets grow with time, the cost of the financial advisor, on the other hand, diminishes.

6. Go for an Advisor that Keeps you on Track

Humility, empathy, and competency are the three main pillars that separate a professional financial advisor from quacks. An advisor who can understand his client’s feelings and assure them of his capability to address them goes a long way in providing a high comfort level that is simply incredible.

A good advisor will tell you what to do and go the extra mile to keep you motivated. The advisor has to establish trust come up with unique steps that will instantly help you progress. The advisor should be your voice of reason during market volatility and help you avoid emotional decisions that can easily lead to greater mistakes.

Bottom Line

Due to the ambiguity in this industry, you need to make sure you exercise the right caution if you wish to get the right financial advisor Sydney that meets all your financial and fiduciary needs. With the right financial advisor achieving your financial goals becomes easy. Despite that, you also get to secure the future of your loved ones financially.