There often comes a time in life when you might need to hire a financial advisor for wealth building. Most individuals however believe that financial advisors are for the super-rich however, this is not true. Believe it or not but financial advisors mostly help middle-class families who need guidance and planning for retirement, buying a home, saving for their children’s education and other major financial goals one might have.
Ready To Advise Everyone
In short, financial advisors are for everyone and so if you are planning to build your wealth today, consulting one for your individual needs is a smart move. Now, the next question is how do these skilled professionals help you to build wealth?
Let’s see below-
Say Goodbye To Emotional Decision Making
Most people tend to get emotional when they undertake financial decisions most of the time alone. For instance, if you generally deal with risky investments, you will quickly react to changes in the stock market especially when it fluctuates a lot. It is here, you should be careful and think about the long-term profits ahead. The moment you hire financial advisors, they understand your individual profile and long-term wealth-building goals. Coupled with their skills and knowledge of the stock and investment markets, they actually stop you from taking rash and emotional decisions that will cost you dear in the long run.
Risk levels
Financial advisors will allocate your funds into a custom portfolio that best matches your comfort levels when it comes to personal risks. If you feel stressed out with your money management choices and believe you are not making the best decisions, hiring a financial advisor becomes a wise move for you.
Are They Worth The Cost?
Financial advisors add value when it comes to wealth building. They assist you with-
- Financial planning (short and long-term)
- The allocation of assets
- Planning your taxes
- Rebalancing your funds
- Making investment withdrawals in time
However, the biggest way a financial advisor can help you is by giving you something known as “behavioral coaching”. This coaching helps you to reframe your thoughts about the financial investment market so that you can act calmly even when the times are bad.
This is like playing a game where you are in a tight spot. Scared players never act on logic, they react with panic and fear often making big blunders. Skilled financial advisors play an instrumental role in checking the fears of their clients. They are focused on rendering fact-based and steady advice especially when the market gets shaky. In fact, this is one of the best perks one can get when they work with a financial advisor.
Find A Financial Advisor With Good Credentials
From the above, it is evident that hiring a financial advisor for long-term wealth building is a prudent step. However, the next challenge is to find a professional whom you can trust. You need to find an expert with proven track- records and years of valuable experience. The goal here is to rely on a financial advisor who will not expose you to unwanted risks. In order to find the right professional for your custom needs, ask the following questions-
- Does he/she specialize in financial planning or focus more on selling products?
- Is tax planning a part of their advice strategy?
- Do they exercise a thoughtful approach to investments or do they focus more on automated programs for investment used by their firms to clients?
- Do they specialize in retirement planning?
Fee -Only Versus Fee-Based
When you are hiring a fee-only financial advisor, this means the professional will not be entitled to any commission when selling an insurance or an investment product to you.
Experts that collect commissions or fees from the sale of investment or insurance products are referred to as fee-based advisors.
The compensation model you choose for your needs has both pros and cons. Weigh them wisely.
The fee-only advisor works independently and receives compensation only from the client for the services given. In short, if you hire a fee-only advisor, he/she represents you. This fee is charged generally as a flat fee for any sort of personal project like, for example, creating a financial plan or working for an hourly rate or a percentage of the assets they manage for you or a quarterly or annual retainer fee.
The fee -only compensation model is common these days and the advisor charges a percentage of the asset he/she manages.
Finding The Best Financial Advisor For Your Needs
Keep the following steps in mind-
- Understand the types of services the financial advisor provides (financial planning, retirement planning or income advisory services)
- Seek professionals with reputed credentials
- Understand their compensation models clearly
- Check online reviews
- Ask questions before hiring to clear doubts and queries
- Verify credentials and check for any complaints
- Educate yourself on how to identify fraud risks
Last but not the least, hiring a financial advisor is like hiring a Chief Financial Officer for your family or yourself (if you are single). Make sure you rely on a disciplined process to find someone with whom you can collaborate with for a number of years ahead. Finding the right professional or firm might take some time, so be patient. This investment of time and patience will be worth the wait as it will give you immense peace of mind in the future when it comes to building your personal wealth successfully- all the best!
