When shopping for a personal financial advisor, what should be asked to ensure we won't be ripped off?
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One of the most important things you should ask are for references. Getting first hand accounts of someone else's experience with this company or person is a good way of determining whether or not this company or person is serious about helping you. You should also ask to see the company's annual financial statements. You can check the web for this information and many companies provide it on their website. You should also ask about their application fees, transaction fees, commission fees, etc. These are very important to know.
First question is how do they get paid and how much do they get paid. Second question is for references of customers and then check them (When you call their customer, the first question is "Is ____ honest and how do you know?). Third, see how they talk with you. Do they tell you what they'll do or do they ask you about you, your goals, abilities, fears etc.
You really want a Certified Financial Planner; they go through an extensive certification process that other financial planners do not. Also, try to use a financial planner that is FEE ONLY. This means that none of their income comes from commssions based off of where they put your money. You cannot trust a financial planner who has a financial stake in where your money goes. Do not use any financial planner that is commssion only or even commssion based.
Your financial advisor should be trustworthy but it is hard to determine that 100% without some kind of relationship over an extended time period. References are great, but any business is only going to refer happy customers to you. So, the best reference is someone you know and trust that knows and trusts the advisor.
Another area that is crucial is your understanding of what they are selling. If they are not willing to educate you in what they are selling, fire them. If you don't fully understand what you are buying, you can't properly analyze how it is doing.
In the end, you alone are responsible for your finances. No matter what you use an advisor for, you need to follow the progress of your investments. By doing that, you should notice if the advisor is doing anything stupid/wrong/immoral/ignorant.
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