The role of a financial advisor cannot be downplayed when you are planning a meaningful future. A financial advisor can help you create the life of financial freedom you dream of due to their knowledge, experience, and insight. However, you must have a foolproof strategy to choose the right financial advisor for planning your future. Given this, here are five strategies to choose a financial advisor.
1. Fiduciary
This is the first strategy or feature you must look for in a financial advisor. The advisor that abides by the fiduciary standard is best for you because the advisor will be legally bound to work in your best interest. The financial advisor should be willing to act in good faith and in your best interest. You can confirm this from their statements and reviews written by past clients.
2. Fee Structure
Another strategy you can use to choose a financial advisor is their fee structure. Although an advisor may use different fee structures, they must not be complicated. The fee structure adopted by a financial advisor should be simple and transparent. There should be no hidden charges. Besides, your preferred advisor should use a fee-only. Their charges must be fee only, with no commissions.
3. Knowledge
If you want the best result and peace of mind, you must choose a financial advisor who has comprehensive knowledge, covering investment, taxes, estate planning, insurance, social security, and Medicare. The advisor should be able to give you several options that will make your plans work out.
4. Vast Tax Expertise
As you are planning your future financial freedom, it is crucial to consider tax implications. Given this, it will help if the financial advisor understands tax issues perfectly and has in-depth knowledge regarding how you can lower your future tax burden or tax liability. If your advisor keeps telling you to contact your CPA regarding the tax implications of your plans, that means that the advisor does not have a high level of tax expertise.
5. Extensive Investment Options
The financial advisor should provide you with a list of diverse investment options, explaining the features and benefits of each. From the investment opportunities listed by the financial advisor, choose the investment strategy that aligns with your goals. Understand your investment goals and how much risk you are willing to take. As much as you focus on ROI, let the advisor tell you the risks involved. A financial advisor that opens up about the returns and risks of each investment option is easier to work with.
Takeaway
If you want to choose the right financial advisor for your investment plans, follow the strategies above to make an informed decision.
