Introduction
I have often wondered just how one can tell whether or not a financial advisor is good or bad. It’s a difficult task because it requires you to look at every single aspect of their business. With the internet, however, that task has gotten significantly easier.
Financial advisors are required to put all documentation they are providing their clients with online. This means that you can look through this documentation and make sure there are no loopholes in what they offer.
How to recognize a good advisor
- Education and experience
A financial advisor that is worth their salt should be at least a CFA, even though it is not required by law. You see, some people call themselves advisors but have no idea what they’re doing. To put this into perspective for you: the CFA is one of the hardest exams in the world to pass. If someone has acquired this degree, you can pretty much be assured that they know what they’re talking about.
- Verification
One of the most important things to do when choosing a financial advisor is to verify them. One of the most common ways of doing this is by searching. You search the name of their company and see what comes up. You can also look at the Better Business Bureau to see if anyone has ever filed a complaint against them.
If you decide to go with a CFA advisor, they will have their website where you can look at the credentials they have in the form of links to their certificates and so on.
- Financial documents
You can also go to their website and look at the financial documents they have. They should be able to give you a summary of their credentials and how long they’ve been working in the industry. You should also look for testimonials from other members of the industry since this is a good way to see how well-known this person is.
- No up-sells
Nowadays, there are a lot of people out there that claim to be financial advisors when they’re not. How can you tell if you’re getting the real thing? Simply put, if you’re told that something in their services is worth $300 or more and then you eventually get something for free, it’s up-selling. You see, this does not mean that they will set everything you need upfront. It means that they will try to offer more than what is needed to justify themselves.
- No hidden fees
This is another thing many people overlook. What happens is that you are told that they have a service and they want to charge you something for it, but the price ends up being lower than what was originally shown. Here’s an example:
An advisor says that they’re going to give you two different investment options and one of them will cost $1,000 per month while the other one will only cost $300 per month. After accepting it, you go to your bank and try to get a credit card with which you can withdraw your money.
Conclusion
If you decide to look at these things and still feel like they’re not enough to trust your money with, then that’s fine. You can learn a lot of other things as well. You can also do things like hire an outside consultant that has been in the industry for a while and ask them questions before you hand over your money.