Financial Advisors for Enhanced Investment: How to Screen the Ideal One

Financial Advisors
  • Who is a financial advisor?
  • What is the role of a financial advisor?
  • How to find the ideal financial advisor?

Do you enjoy scouring over financial data and financial journals and make head from tail off the information? If you do, then you should consider a career as a financial advisor, an FA. If not, like many of us, then what you need as you venture into the investment pool is a financial advisor. Data shows that more than two-thirds of American millionaires utilize financial advisor services.

Who is a financial advisor?

An FA is an expert in the finance field, offering consultative and advisory services to individuals and entities at a cost. They are responsible for wealth creation and growth strategies, reduce the overall investment cost, and debt elimination, a one-stop-financial shop. 

Therefore, an FA listens to your investment objectives and draws a road map for you on how to achieve them in a cost-efficient manner and timely manner.

Why hire a financial advisor? 

  • They sort all your complex financial needs
  • Eliminate emotional decision making during high market volatility
  • Help manage your investments optimally.
  • Advice on how to achieve investment profitability and healthy personal finances. 

To achieve all of the above, financial advisors play the following roles:

  • Plan investment activities

Research investment instruments and ensure investor portfolios meet their objectives while maintaining allowable risk levels.

  • Plan taxes

One of the major income-reducing burdens is taxes. They advise on how to reduce the tax burden legally. 

  • Manage debt 

FAs ensure debt prioritization and strategies to reduce debts to a minimum.

  • Retirement planning 

Help in developing a retirement investment strategy that ensures a blissful retirement life through enhanced retirement accounts.

  • Budgeting help

FAs ensure optimal financial budgeting, intending to meet individual financial objectives.

How are financial advisors grouped?

The main financial advisor niches are seven, grouped depending on the financial services they provide. Depending on individual needs, investors get to choose from the following pool. 

№ 1. Investment advisors

They are financial experts under the SEC, securities, and exchange commission umbrella. These are professionals knowledgeable in:

  • Equities
  • Bonds
  • Mutual funds
  • Forex
  • Exchange-traded funds
  • Real estate markets

Their experience transcends market cycles and market participants’ behaviors; therefore, they advise on portfolio readjustments for maximum returns at tolerable risk levels.

№ 2. Personal bankers

These are the staff that takes care of your personal retail banking needs. They help with bank-related products such as savings accounts, loans, and college funds. 

№ 3. Accountant

They are financial experts in the accounting field who possess a certification from the chartered institute of public accountants, CPA. They are instrumental in preparing taxes and ensuring you comply with all the IRS requirements, therefore, eliminating costs associated with hefty tax-related fines. 

These are experts in taxation law, among other legal matters. Ensure all investor activity is in the up and up: within the confines of the constitution. Help with tax planning which is all about maximum cash flow while paying minimum income tax. They are the go-to experts for estate planning.

№ 5. Insurance advisors

They are professionals on insurance matters. Do an in-depth analysis of debts, assets, cash-flow requirements, the financial market conditions, and advise on the required insurance needs to safeguard investor wealth. They earn commission on policies sold hence tend to sell high-premium insurance products; be on the lookout.

№ 6. Robo advisors

Refers to computerized algorithms that have risen in this tech-dominated world. Robo advisors use individual financial data to analyze expenditure vs. financial requirements and develop the optimal investment plan and management strategies. 

№ 7. Financial planner

They are experts in all of the above and masters of none. They are regulated under the certified financial planner banner. They take a holistic view of personal finances and develop budgets that ensure minimal debt, investment for enhanced income and wealth creation at reduced risk, and a low tax burden.

How to screen for the best financial advisor

Knowing the different FAs and their roles, all that remains is to choose one that will enhance financial health. The starting point is the authorized financial advisors list by the National Association of Financial Advisors. Being on this list does not mean the FA is ideal for you. 

This is just a checklist to shortlist and then screen them on the following:

  • Background checks

Do a thorough search of the FA’s track record, focusing on former clients’ integrity, confidence, and trust.

  • Customer service

Enquire about professional body affiliation, a sign of accreditation to show that a client comes first, financial fiduciary.

  • Consultancy fees

Hire a FA within your budget. This decision should be guided by individual net worth and then the industry-standard fees. 

  • Performance

By the nature of their profession, FAs are highly charismatic people with likable personas. Look into their knowledge base, historical performance, and relevant experience to ascertain if they match individual investment portfolios and financial situations.

Final thoughts

Relatives, friends, and self-proclaimed internet gurus are not ideal FAs. Data shows that, on average, an annual loss of $1200 is due to inadequate financial knowledge. Unless you possess the requisite expertise, the services of a financial advisor are a must-have, whether you have made losses before or not.

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