Stepping into the world of financial investment can be bewildering to the uninitiated. In fact, just choosing an adviser can be a confusing exercise. Here are some common errors made when choosing a financial adviser, together with some clarifications to help identify which is the best choice for you.
Know the type of adviser you’re engaging
A common mistake is not knowing the difference between a broker and a financial planner. A broker typically looks after your investments, but unless you’re a high net worth individual with multiple millions to manage, they’ll do little else. A financial planner, on the other hand, takes a more holistic approach, looking at all your finances, such as insurance, tax and retirement planning.
Check your adviser’s credentials
Failing to do a background check on your adviser could be a recipe for disaster. As reported in FT, doing an internet search for a history of compliance breaches can help you avoid engaging the wrong adviser. Anyone tasked with providing financial advice should have the appropriate qualifications. You must be sure this is an individual or firm you can trust.
Know what you’re paying for
Fee structures can be complex, but there is truth in the saying that you get what you pay for. Some advisers may entice new clients with low fees and then sell them unnecessary products. A good adviser may charge more, but you need to be clear about how they earn their money before engaging them.
Consider fiduciary advisers
A fiduciary adviser is one whose standard is to always put their clients’ interests above their own. Typically, a fiduciary financial planner will be less likely to have any conflicts of interest when engaged in providing financial services.
It’s tempting to engage an adviser who promises great returns on your investments. Investing for bigger returns means taking bigger risks, as the value of companies can lose value as quickly as they can gain. A good financial adviser will be frank with you about what returns you can expect from your investments and will use robust financial adviser software provided by vendors like www.intelliflo.com to help them give you the best advice.
They’ll also assess your financial situation and advise you on how much risk you can accommodate and how much of a return you can realistically expect.