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DNA WEALTH CONCIERGE

STEPS TO FINDING A SUITABLE FINANCIAL ADVISER

INSIGHT, CLARITY, TRANSPARENCY AND INTEGRITY ARE EMBEDDED IN OUR DNA

1. UNDERSTAND THE DISTINCTIONS IN SERVICE OFFERINGS

Some financial advisors offer financial planning services but not investment management; others manage investments, but provide little financial planning. Some have expertise in retirement income planning which is focused on the distribution phase (for those near or in retirement) while others focus on the accumulation phase (for younger folks who are ten years or more away from retirement).

To find the best financial advisor for your situation you need to understand the differences in the types of services that may be offered, know what type of financial advice you need, and know which services a potential advisor provides. Here’s a brief summary of three main types of service offerings:

  • Financial planning
  •  focuses on all aspects of your financial life such as how much to save, and what type of insurance you need – it is not just about the investments.
  • Investment advisory services are focused on the investment management functions such as what investments to own in which accounts. I believe the best investments are chosen only as part of an ongoing financial planning process.
  • Retirement income planning is focused on how you coordinate all the pieces such as Social Security, taxes, investments, pensions, retirement date, and so on, so they all align toward the goal of delivering a retirement income for life.


2. SEEK FINANCIAL ADVISORS WITH REPUTABLE CREDENTIALS

All credentials are not alike. Some financial advisory firms provide a risk monitoring framework which is an easy-to-use tool for sales people to appear as experts.

To find advisors or financial planners with reputable credentials look for someone who has a license/regulated in a reputable location. Sometimes doing a simple search on a regulators website will highlight if a person has been directly regulated in the past and has the proven pedigree and experience to continue to provide advice


3. KNOW HOW FINANCIAL ADVISORS ARE COMPENSATED

There are numerous ways financial advisors can charge, but in my opinion the most objective and unbiased financial advisors are fee-only. To hire the best financial advisor you’ll need to know all the ways a potential financial advisor may be compensated, such as charging an asset based fee, hourly fee, participating in commissions or charging an hourly rate.

 

And you’ll want to understand the difference between a fee-only advisor who represents you – and non-fee only advisors who may be able to receive other types of commissions or incentives from their company based on meeting sales goals or objectives.

There is nothing right or wrong about various compensation types. For example if you are buying an investment that you plan on holding for a long time, and for which you will not need ongoing advice, paying a commission may be the most cost-effective way to buy it. However if you have the desire to have someone readily available to update your financial plan and address ongoing questions, a commission-based fee structure is likely not optimal.


4. ASK THESE QUESTIONS BEFORE YOU HIRE

The right questions can help you weed out financial advisors whom you don’t communicate well with, or who don’t typically work with clients like you.

It’s important to have several questions prepared that can help you determine how the financial advisor communicates, as well as their area of expertise and their ideal client. The key to any question you ask is making sure you understand the answer, or if you don’t, be sure you feel comfortable asking follow up questions.

The right questions can help you weed out financial advisors who you don’t communicate well with, or who don’t typically work with clients like you. 

It’s important to have several questions prepared that can help you determine how the financial advisor communicates, as well as their area of expertise and their ideal client. The key to any question you ask is making sure you understand the answer, or if you don’t, be sure you feel comfortable asking follow up questions.

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