Should You Hire a Financial Adviser?

An expert shares what you need to know before working with a financial adviser.


Planning for your financial future

It’s always a smart idea to start planning for your financial future. If you don’t know where to start, working with a qualified financial adviser is a good first move.

Selecting the best financial adviser for your needs:

After finding a financial adviser you’re interested in working with, ask a few questions about his or her experience. Some advisers have letters or professional designations after their names, like me! CFA stands for Chartered Financial Analyst. Use the opportunity to ask what each designation means and how it can benefit you. These professional designations are usually provided through a membership association or organization. You can ask advisers for details about these organizations and contact them directly to learn what they are qualified to give advice on, whether they have professional liability insurance, whether there have been complaints filed against them in the past and if their qualifications are currently in good standing.

As mentioned earlier, not all advisers have designations. If this is the case, ask how long they’ve been in the industry, what experience they have and about any courses they’ve taken that can benefit you.

Budgeting for your financial adviser

Next, you should inquire about fees. Very few people ask about them. In fact, the financial services industry might be one of the only industries where people don’t ask questions ahead of time about how they’ll pay for the services they receive. It’s important to know, though, because fees can add up quickly over the years and erode your return if they’re too high.

Advisers may get paid in several different ways. Some options included collecting commissions on the products they sell, charging an hourly rate for the work they do or charging a flat percentage annually based on the amount of assets you’ve invested with them (for example, a one percent fee on the value of your portfolio). They might also use a combination of the above.

Make sure to ask advisers specifically how you will pay them, as well as an estimate of how much you will pay them each year and what services you can expect in return for this fee. This last question, in particular, will help you better understand the added value that your adviser can provide to you.