Managing your wealth, no matter how big or small, is a cumbersome task. Your financial advisor helps to keep your money safe while making it work for you. Before you start working with someone, ask them these important questions.
What Certifications Do You Have?
You need to know what licenses and certification your financial advisor has. Most of the top consultants are certified public accountants, fund specialists, consultants, or analysts. Some even carry a Juris doctorate and insurance licenses. While everyone has to start somewhere, you want to work with a firm that has extensive experience in the field.
What Safeguards Are in Place to Protect Assets from Fraud?
Your assets need to be protected by a reputable custodian. When you ask about safeguards, you should also ask about any infractions he or she has received in the past both with the firm and as an individual. To provide you with the best service, your financial advisor should be a fiduciary.
Consultants with a strict code of ethics have standards that they share with their clients. However, no matter their standards, they should be in compliance with Financial Industry Regulatory Authority, state and regulatory agencies, and the Security’s and Exchange Commission.
What Are Your Fees?
When it comes to fees, your counselor should be 100 percent transparent. He or she needs to explain his or her exact fee structure, so you understand how you are paying. Some are fee-only, meaning they provide a flat rate for services rendered.
Some investment consultants charge a commission fee. That means they make money off each product you purchase to help your investments grow. It is important to know which one you are working with, or if you are with someone who charges a fee in addition to earning commissions.
What Access Do You Have to Earning Reports?
As your financial advisor, he or she should have direct access to the top holdings of where your investments are. He or she needs to be able to tell you immediately what the earnings report is anytime you call.
At the very least, he or she should be able to educate you on your holdings before any investment of assets. By educating you on available options and what assets are invested, you can better understand what the consultant suggests.
How Often Do You Communicate
When it comes to letting you know how your money is doing, the counselor should be open to communication. He or she should send out weekly announcements about the market. Also, you must be informed of trade notifications immediately and receive an explanation on every buy and sell option. Most firms also send out information about their monthly investment outlook as well as a quarterly outlook. Brokers also offer to keep their customers informed with educational information and fact sheets.
Ask the tough questions of a financial advisor before asking him or her to manage your funds. It helps you to weed out the inexperienced and shady consultants before losing any money.