Looking For a Trustworthy Financial Advisor? Here are Some Screening Precautions You Can Take

inancial Advisor

It’s quite easy for a person to prepare a simple budget to follow. But when it comes to deciding on assets, adept financial knowledge is needed to make the right decision. Unsurprisingly, a lot of people do not feel comfortable resolving it on their own. That’s where a financial advisor comes in. 

A financial advisor is someone who gives financial advice or guidance to their clients on taxes, estate planning, investments, college, savings, insurance, mortgage, and retirement. They get compensated for their services. 

Therefore, financial advisors shape the finances of their clients in profound ways. When looking for a financial advisor, the individual must be trustworthy, meaning they have their client’s best interest at heart. Moreover, they must be highly qualified to make the right decisions. That’s why we’re going to explore some screening precautions to take when looking for a financial advisor. 

  • Define Your Needs

Different financial advisors focus on different things. Some offer financial planning services, or investment management services, while others offer retirement income planning. Your goals will determine the kind of advisor you need. 

  • Seek out advisors with reputable credentials

All credentials are not created equal. That’s why it’s crucial to look for qualified ones. At the very least, the individual must have a Bachelor of Business in Financial Planning, work with a financial advisory company that holds an Australian Financial Services License (AFSL) from ASIC, and have a certification from a recognized organization like the Financial Planning Association of Australia (FPA). 

  • Identify how they’ll be Compensated

There are two major types of compensation schemes: fee-only and non-fee-only. A fee-only advisor gets paid for the financial advice they offer. A non-fee-only advisor may receive a commission and other incentives for their services. The reason for the financial advisor determines which payment option will be cost-effective. For instance, generally speaking, if a person is holding on to an investment for a long time – and will not need ongoing advice-  a commission-based payment plan might be preferred. 

  • Interview them Before Hiring

An interview helps to get a sense of the person’s personality. It also provides the opportunity to ask important questions about their experience, approach (methodology), compensation plan, as well as their ideal client. This helps to determine if they’re the right fit. 

  • Carry out Background Checks

It’s extremely important to be certain that the financial advisor is legitimate. That’s why it’s crucial to verify their credentials through an education/certification verification. A criminal history check like an afp police check which is commonly used in Australia will help uncover past crimes they’ve been involved in. If a financial advisor has been involved in fraud, then it’s a terrible idea to hire him/her. That’s why it’s important to verify that the financial advisor is who he/she claims to be. 

Conclusion

When choosing a financial advisor, all due diligence must be carried out because they have the power to influence the financial future of their clients. By undertaking these screening precautions, you’ll be better equipped to hire a trustworthy candidate.  

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