The Best Qualities to Look for in a Financial Advisor

0
25

If you are looking into getting a financial advisor, here are the qualities that should be a crucial part of your decision.

Financial advisors should have several qualities: at least 10 years of work experience, a well-rounded background, clear, honest communication and a fiduciary standard.

Experience: Look for at least 10 years of experience. A financial advisor should have been practicing long enough to deal with a variety of market situations?for example, down and up markets. Even greater: a work history for twenty years or more because that means experience with a variety of down markets.

Well-rounded, extensive services: Financial options are increasingly varied and complex, and an advisor needs to be more than a person dispensing advice. The advisor you select should also deal with estate planning, trusts, lending options, life insurance and more. He or she should also be familiar with the international investment and securities scene and not just the domestic arena. Your financial portfolio needs to be customized and tweaked as necessary. Don?t take your chances with someone whose background may have gaps.

Clear, honest communication: Your financial advisor should convey up front how often he or she will analyze your various accounts and the planned approach. It should be done at least once every quarter with thorough reports delivered to you in the areas of the advisor?s compensation and how well you are doing compared with your goals.

The advisor should also disclose his or her pay structure. For example, is he fee-based, meaning he does not get commissions? Even if he is fee-based, does his fee come in the form of a flat payment or as a small percentage of your assets that the advisor supervises? Either structure is fine, but the percentage structure does give extra motivation for an advisor to do the best possible job.

Fiduciary standard: It may seem like common sense that an advisor would put his interests above yours, but not each advisor is required to follow a fiduciary standard. Check with potential advisors about if they adhere to fiduciary standards as part of the Investment Advisors Act of 1940.