“A financial adviser is a professional who renders investment advice and financial planning services to individuals and businesses. Ideally, the financial adviser helps the client maximize their net worth while minimizing risk by using proper asset allocation.”
Many times, people who already have an adviser shuns other planners because he or she feels that there is no need for another adviser in their lives. This is true to the extent that IF & only IF your adviser is currently serving you well and thinking with your best interests. A professional adviser is one who helps you with proper planning and “Be Good but not Nice”. He should be highlighting key areas in your life that needs to be looked at and help you get a better long term return compared to other normal investment vehicles.
It is NOT, in any means, someone that comes to sell you something useful and disappears like a magician. Which means, you may have your friend or relative serving you but they are only helping you minimally because they are salesmen, not advisers.
So what should you look for in a Financial Adviser?
1. Nothing comes for nothing:
There is such thing as free advice. However, remember that if you use the services of an adviser, at some stage they must have some hope of getting paid or of selling you something that pays them a commission. A professional adviser will keep you updated and service you as long as you welcome him to. A salesmen adviser will try for a few months and give up on you.
2. Look for an upfront declaration:
A competent honest adviser will make it clear how they are paid and happily tell you in detail how this happens. Somewhere, somehow, people need to be paid. If it is not clear to you how your adviser is paid, keep on asking. You must understand how they are paid, so you can understand their bias. If the adviser tries to hide costs involve, get rid of him. How can you trust your money with someone that isn’t proud of what he should be paid for? Hiding the costs means that he feels that he doesn’t deserve your money.
3. Plan for your first meeting:
At your first meeting, or over the phone, get straight to the point about your position and what you want. Professional advisers who are successful have good technical skills, but they also have strong people skills. Advice is a personal business and few advisers will be willing to offend people by saying early in a meeting that you are just not the sort of client they want to look after, so it really is up to you to be able to succinctly say, ‘Hey, this is my situation, am I the sort of client you service?’
4. Build a relationship:
The best advisers want to give you ongoing advice and will charge you an annual fee for this. It is important to have an ongoing relationship with your adviser. You want someone who will understand your needs and help you solve your investment problems now and in the future. You don’t want someone who sells you a product, takes the commission and then forgets you. Be very cautious about an adviser who only earns a commission when you buy something. They will only wish to see you on an ongoing basis if you want to buy something or they can sell you something. Frankly, if the ‘advice’ is always free and the adviser only makes money when you buy product, it is very hard to see how you are ever going to get unbiased advice.
5. Be sure they are working for you:
A good adviser should be giving you quality advice that suits your needs - not using you to help fund his or her personal deals. One of the great traps in financial advice is buying deals from the adviser when the adviser is personally involved in the deals. A professional adviser needs to keep a critical eye on your investments. This means that they should not be personally involved. If they have lots of their money tied up in the deal, this may sound like a good thing to you, but it may also cause the adviser to become too emotionally tied to the investment, leading to poor decisions on your behalf.
6. Know what you have got and know what you want:
Don’t expect a professional adviser to waste valuable time trying to work out things that really you only know. Approaching an adviser in a logical, prepared fashion will pay big dividends. The biggest obstacle to finding a professional adviser is not being clear about what you want. So, before you find an adviser, sit down with a pencil and piece of paper somewhere quiet and pour a glass of wine if it helps. Write down all of your assets and liabilities, your income and spending habits. Think about your aspirations for your career, relationships, any dependents and estate planning. List your insurance and your long-term goals. Consider when you want to stop work, how much income you would like to have.
After reading through this, take 5 minutes and think “Is my current adviser like this?”. Weighing the fact that I invested $???? with him, I should be ranked ? in his list, am I getting the right amount of attention? Understand that the higher the amount of assets you have invested with him, the quality of service definitely rises.
Hence, keep looking around for better advisers if your current one doesn’t satisfy you. There are a lot of salesmen advisers out there, but there are also advisers that are honest and acts in your best interest. So STOP SHUNNING them! You never know when you have just chased off a great adviser.
