Hiring anybody to do anything is always tricky because you find yourself having to predict the future and how thatwill perform in it. In , there's always a call that has to be made while evaluating the and honesty of the person you hire. But selecting a is even trickier because the are much higher. For example, if you hire a plumber and he doesn't out, you him the agreed and move on with your life. But if you hire a and he doesn't work out, then not only do you have to pay the agreed but you also have to with the that your life or may have been jeopardized. Therefore, selecting the best possible financial advisor is much more critical because you are giving that person to your .
However, many people further reduce theirof finding a financial advisor by not gathering enough and by making the following .
Cutting corners and not putting enough effort into the process
People tend to take thetoo lightly. There are a number of steps in this process (e.g. identifying your needs, researching different advisors, checking references etc.) and each one of them is time consuming. But in the long run, it's time well spent not only because finding the right person can help you achieve your but also because finding the wrong person can you a of .
Relying solely on recommendations from friends andto make a decision
Everybody's financial situation is unique, so an advisor who worked well for somebody might not work well for you.
Not understanding what kind of advisor you are looking for
There are numerousof financial advisors out there (e.g. , fee-only planners, fee-based planners, comprehensive planners, advisors, planners etc.) and people tend to they are all basically the same. That is not the case. If you just tax , don't go to a just because he calls himself a financial advisor.
Confusing salesmen with financial advisors
Not understanding what feeyou will be paying
For example, paying a financial advisor aevery time you or sell a stock is not the same as paying an advisor a fee based on . In the former, the advisor makes money no matter whether your investment goes up or down but in the latter, the advisor makes a lot more money when your investment goes up. Therefore, the advisor's are more aligned with yours.
Not researching an advisor's background to check past disciplinary actions
Not spending enough time judging core competence
An advisor canthe right and have the correct but if he is not good at his job, there is no point in hiring him. Therefore, people should take the time to whether the advisor knows what he is doing and has a sufficient level of . One way of judging this is looking at the past of the advisor, especially in (everybody can make money in ).
Not evaluatingand tendencies of an advisor
Peopleto make sure that there is a good fit between their and the advisor's investment and for risk; otherwise, the relationship can turn out to be frustrating (and expensive).
Putting too much emphasis on an advisor's personality
Don't hire an advisor just because he is. Some financial advisors are especially good at coming across as friendly because that is part of the , but that's not the most important .
What Can You Expect Out of Your Financial Advisor?
This often depends on the kind of financial advisor that you hire. If you are hiring a 'niche' financial advisor (e.g., estate planner, tax advisor, etc.), then yourshould be more specific than if you were hiring a comprehensive financial advisor or planner. However, in both , you have a right to expect the advisor to do a good job.
People tend to expect too much from their financial advisors when it comes to investment performance and they tend to expect too little when it comes to other things. To expand on this a little, some people think of their financial advisor as a stock picker. They have unreasonable performance expectations and when they don't see those results, they are disappointed. Obviously, those expectations are unrealistic and people need to keep this in mind going in.
However, there are a number of other important areas where people don't expect enough from their advisor when they have a right to. Some of these things include not expecting aof why an should follow a certain (people tend to think they have to follow a financial advisor's advice blindly), and not expecting an advisor (especially if he is comprehensive planner) to give them advice on the of major life changes (e.g., marriage, birth of a ). Individuals should consult with advisors before these but sometimes are hesitant to do so because they think it falls outside the of an advisor's responsibilities.
There are also small administrative expectations that people don't have of financial advisors when they should, such as getting detailedand timely updates on the performance of key .
Having said all this, people also need tothey also have a to make the relationship work and they have to do certain things too (e.g., keeping the advisor informed, understanding the investments being recommended) and not let the advisor do all the work.