What you should be looking for when hiring a personal financial advisor

Your business might be the most precious thing to you. Basically, it represents your passions, your beliefs, your hard work and everything that embodies you. You try to make it work since it is your life. You have goals to reach, and you are actually hitting them.

But a problem comes in here; you probably are not the best financial planner there ever was. Actually, there is a big problem out there. Studies have shown that 60% of small business owners do not work with financial advisors or any wealth management professionals.

You see, in the financial world, there are very many aspects to deal with that require lots of focus. For example, budget control is different from managing a portfolio. Well, you need someone who is specialized in this area to clearly show you the road to take.

And that’s where a financial advisor comes in. Now, if you are in Canada and are looking for one, there are a number of recruitment agencies Toronto has to offer, just in case you do not know where to start. These will help you find the exact person you are looking for.

Anyway, before you settle of hiring someone to deal with your money plans, then there are a number of things that you should consider. This article will be explaining just that.

Identify the reasons why you need a financial advisor

First of all, a big mistake that many business owners make is thinking that when their business succeeds, they will automatically become financially secure. However, life has shown us that there are many factors that can affect a business, including natural disasters, recession, etc. It is, therefore, important to have a professional that can help you look into an uncertain future and make it work regardless of whatever happens.

Actually, a survey by F&G revealed that 70% of the respondents with investments worth more than USD 1 million had financial advisors. This just shows that having someone to help you manage your wealth is very crucial in your road to financial prosperity.

However, before you hire a financial advisor, you want to spend some good time pondering on what areas you need them to help you work through. You will want to know what kind of help you will be requiring. For example, do you want to develop an overall financial plan, plan your estate or just advice on how to manage your portfolio?

Again, you will want to know whether you need a full-time employee who will be dealing with overall financial situations or someone who will be helping you develop a long-term financial plan. By understanding what you really need, you will actually be able to know who can work best for you.

Understand the different types of financial advisors

You should be aware that there are different types of advisors out there, and there are differences in how they collect their fees. This is important to note since you might find yourself paying someone more money than you should have because you never considered their nature.

• Robo-advisors: These are low-cost automated investment platforms that mainly help individuals invest for mid-term and long-term goals. They do this by using preconstructed diversified portfolios of ETFs. According to Brian Behl, a CPF at Behl Wealth Management, robo-advisors are good for young, tech-savvy people who want to just manage their retirement funds. To pay for their services, you can either pay a flat monthly or annual rate or percentage of your invested asset.
• Fee-only advisors: These ones are paid either on an hourly rate or at an annual fee.  It is good to note that these advisors don’t earn any commission on any sale of investment products to clients.
• Fee-based advisor: For this one, they will charge you fees and also earn a commission for the products they recommend to you.
• Wealth managers: These ones majorly focus on individuals with a high net-worth and offer a wide range of services including tax planning, investment management, etc.

One thing that you should never forget is to ask a potential advisor whether they are a fiduciary. This would require them to put your interests before their own. Actually, an advisor who holds certified financial planner (CFP) credentials is required to act as a fiduciary to their client.

So, it would be great to ensure that your advisor holds this certificate. In fact, Karen Von Voorhis, a fee-based CFP and director of financial planning at Daniel J. Galli & Associates, calls this certification the gold standard in the financial planning industry.

In conclusion

No one should ever lie to you that you are too young or do not have enough assets to require a financial planner.  Actually, having a financial advisor when you don’t seem like you need one will put you among the population that really value their wealth and are serious about reaching financial prosperity. Once you can manage to plan your wealth, then you are sorted.