What is a financial advisor?
The first thing which is important to understand is the meaning of a financial advisor and what their role is and what it is not. The principle idea is that they help you manage your money and finances. Certified financial planners aim to give you help and advise on how you can reach your financial targets by giving you advice on investments etc.
There is now the emergence of robo advisors which are a computer algorithm aimed at giving you advice based on software calculations.
Certified financial planners aim to give you help and advise on how you can reach your financial targets by giving you advice on investments etc.
How do you choose your financial advisor
As with all the articles I write, I advise people to consider all the risks before making any financial decisions and don’t spend more than is available. Whilst a human option sounds like the best one, these robo advisors are popular for a reason, they tend to generate results and cost a fraction of the price of traditional financial advisors.
It is important to know that financial investors take a percentage on the money you invest with them that they manage. This can be up to 2% which is a lot of money if you are investing a big size amount. Digital advisors charge as low as 0.2 which is a big saving week on week.
Credentials: Before choosing an advisor it is important to check their credentials, most gave CFP, CFA, CPA, and ChFC. The CFP (Certified Financial Planner) is considered the standard in the personal finance industry with advisors requiring several years experience and to have attended courses and taken exams.
Before choosing an advisor it is important to check their credentials, most gave CFP, CFA, CPA, and ChFC. The CFP (Certified Financial Planner) is considered the standard in the personal finance industry
Fees and Charges
Different financial advisors or planners have different charges, here are the 2 most typical:
Commission: Financial Advisors often work on commissions on what they sell to you. After all you are buying a product and it is important to note that if advisors are working on commissions it is likely they are advising you to go with ones they get a higher cut from. Therefore their judgement can be a little swayed.
Fee-Only: These are what we recommend as the financial advisors act in the best interest of the clients and not the products they sell. They charge a flat fee of your assess and aim to fully give you the best advice available. They also offer information on everything else including estate, retirement, investing, taxes, education funding.