I found a Fi­nan­cial Ad­viser, now what?

Palawan Daily News - - Opinion - By An­dré Mikhail Obierez

Hey! It’s been awhile. Well, a bit over 4 months since my last post.

In the in­ter­est of sav­ing time, let’s have a quick re­fresher. The last time we talked about the im­por­tance of find­ing a fi­nan­cial ad­viser to start your fi­nan­cial jour­ney which is quite a daunt­ing task es­pe­cially with the plethora of fi­nan­cial prod­ucts and count­less huck­sters push­ing sales down your throat.

Nat­u­rally, you would need some­one, an ally, who’d sift through the mess and help you out. That’s where the fi­nan­cial ad­viser comes in. Also, an im­por­tant thing to keep in mind is that the value of ad­vice is not ‘tim­ing’ the mar­ket, which, I be­lieve is im­pos­si­ble, but to help you fig­ure out your goals and guide you to achiev­ing them.

Now we’re up to speed, right?

Great! But what if you find an ad­viser, how are you sup­posed to also weed out the good (the ones who put your in­ter­est first) ver­sus the bad (some­one just try­ing to score a com­mis­sion)?

We start with ask­ing the right ques­tions and since there is no point in rein­vent­ing the wheel, we will be bor­row­ing heav­ily from The Na­tional As­so­ci­a­tion of Per­sonal Fi­nan­cial Ad­vi­sors’ “Tough Ques­tions To Ask Your Ad­vi­sor.” Since there are over 20 ques­tions, we’ll just nar­row to the most salient ones while also com­bin­ing some oth­ers.

1. Ad­viser Back­ground

You should ask what their ed­u­ca­tional back­ground is and whether they have cre­den­tials like the Reg­is­tered Fi­nan­cial Plan­ner or Reg­is­tered Fi­nan­cial Con­sul­tant. Also in­clude how many years they’ve been prac­tic­ing as ad­vis­ers. This helps you know if they have the knowl­edge base nec­es­sary to give you the right ad­vice and the ex­pe­ri­ence nec­es­sary to split be­tween the­ory and how to im­ple­ment it.

2. Com­pen­sa­tion

As I’ve writ­ten pre­vi­ously, how ad­vis­ers get paid is one of the most im­por­tant de­tails to know since it helps you know if your in­ter­ests are aligned.

Ask if they are (i) Fee-only, (ii) Com­mis­sion only or (iii) a com­bi­na­tion of both. This helps you un­der­stand if an ad­viser might be bi­ased in fa­vor of any sin­gle prod­uct like in­sur­ance or mu­tual funds or they are im­par­tial since they’re only paid when they give ad­vice.

Also, if ad­viser refers pro­fes­sion­als like lawyers or accountants, be sure to find out if they get re­fer­ral fees. This helps you know if there are un­sa­vory deals which could also pad the cost of ad­vice as the ‘pro­fes­sional’ might charge you higher to pay your ad­viser.

3. Ser­vices

Once you know how they earn money, you can ask in greater de­tail what ser­vices they of­fer. Do they of­fer ad­vice on the en­tire gamut from goal set­ting to tax plan­ning and even up to ed­u­ca­tion plan­ning (fund­ing your chil­dren’s col­lege ed­u­ca­tion)? This bit helps you know if the fees are worth pay­ing for and whether they full ad­dress what your needs may be.

An­other im­por­tant ques­tion is whether they pro­vide a writ­ten anal­y­sis of your fi­nan­cial sit­u­a­tion and the rec­om­men­da­tions? As this helps you see a clearer pic­ture of your cir­cum­stances and what to do about it.

This should be fol­lowed up with the ques­tion of whether they help you with im­ple­men­ta­tion and is the ad­vice on­go­ing? This helps you know if they can fully par­tic­i­pate in your jour­ney and whether you will need more “al­lies”. Depend­ing on your needs, you might have to look deeper to find that ad­viser that meshes well with your needs and your wal­let.

I hope this small list of ques­tions will help you sift the “wheat from the chaff” and on­board an ad­viser you can truly trust.

If you have ques­tions about the mar­kets, fi­nance or just about any­thing, feel free to email me at an­[email protected]­lynews.com and I’ll get back to you as soon as I can. Your ques­tions may also be fea­tured on my fu­ture posts so you can look for­ward to that.

Dis­claimer: Just a re­minder, dear reader, that the con­tent in this col­umn is my opin­ion only and should not be con­strued as in­vest­ment ad­vice be­cause I am not your fi­nan­cial ad­viser, nei­ther did I take into con­sid­er­a­tion your per­sonal ob­jec­tives, fi­nan­cial sit­u­a­tion, needs or cir­cum­stances as your fidu­ciary. This col­umn is mainly for your en­ter­tain­ment and ed­u­ca­tion only.

Tags: Al­phaEdge Re­search, Per­sonal Fi­nance, Get­ting Started, Be­gin­ners, Due Dili­gence

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