With the changing economic and environmental scenarios, the requirement for financial advisors has increased in the past 10 years. People are trusting on financial professionals for the proper management of their wealth. But some dishonest advisors can risk your hard-earned money. But many advisors work with integrity. Thus getting the best financial advisor is lucky on the client’s part.
Thus, you are fortunate if your financial advisor showcases any of the following traits.
This is the most important thing in the financial planning process. The client must be aware of the fee structure he is paying to the advisor. Any conflict of interest should be disclosed to the client. If your advisor is openly informing you of all the conflicts and explaining to you the same then he is going great. The different fee structures charged by advisors are commission, percentage of asset under management, and a hybrid approach between the two. There should be a hurdle rate and maximum draw down provisions so that advisors don’t charge you for the same profit twice.
If your advisor is asking you to meet frequently to discuss your portfolio because of your changing requirements or to review your portfolio and his performance then it is very good. As many advisors don’t meet with their clients for months and the clients are unaware of their portfolio performance. Clients must have an idea about their portfolio position.
Many advisors just use some financial terminology that may not be understood by you. But the best advisor will try to educate the important words that must be known to you. He will also give you a reason for his investment in certain stocks and bonds rather than just investing in it.
“A good advisor won’t just try to sell you a certain stock or mutual fund; he’ll explain your options in detail and encourage you to learn more about what each one entails,” says Maurie Backman, a personal finance writer who’s passionate about educating others.
Your advisor must do investment on the basis of your primary, secondary, and aspiring goals. This gives a proper categorization of your assets. And advisor also knows when and with what fund he can do tactical reallocation. A financial advisor must also have some flexibility so that he can tactically play with your fund to generate arbitrage opportunities.
Talking about guiding in goal-based investing a person who can be a perfect example is Dwayne Rettinger a Certified Financial Planner with 10 years of experience helping clients make sound financial decisions. Dwayne Rettinger provides financial guidance and planning to clients at Rettinger & Associates Private Wealth Management, a part of IG Wealth Management.
Your advisor should be realistic while educating you about the risk of different asset classes. Most of the assets may not be suitable given your risk bearing capability. Thus, he should make you aware of the degree of risk of different assets. He should educate you with the help of numbers so that you can better understand the scenario.
Thus, having a great advisor is important for you to have an assurance of your wealth. A financial advisor should always work for the benefit of the client rather than his own benefit.