Everything you need to know about Financial Advisors
What does a financial advisor do?
Before you get started with your search for a financial advisor, it is important to know what a financial advisor actually does. Different advisors have different services they offer, but most advisors offer the same basic options.
A financial advisor helps you meet your goals and understand what it takes to make them a reality. They can guide you through saving, investing and growing your money. They are experienced in assessing the financial needs of individuals and can help them make the right decisions when it comes to investments, tax laws, and insurance decisions. There is evidence that some individuals do better when consulting with an advisor rather than doing their investing on their own.
Who could use a financial advisor?
Anyone could benefit from the advice of a financial professional. A financial advisor can help you save and invest for any big goals you may have in life. Whether you plan on retiring next year, sending a child to college in 18 years, or just getting a broader look at your assets, you can find an advisor to help.
How can a financial advisor help you?
Many hours of research (and years of experience) go into managing your investments and financial goals, and options can become very complicated. Hiring a financial advisor to keep you on track with your goals can save you time. They will offer advice on anything related to personal fiance, plus it can be a comfort to turn over some of the management to a professional who has a broad knowledge of money management.
Can you be your own financial advisor?
It is possible to manage your own investments, but it is not a task for everyone. To do so you must be vigilant about monitoring your own plan and be able to adapt to changing market conditions while keeping your emotions in check. If you do decide to take the do it yourself approach be sure to utilize the free information and advice provided by your 401(k) provider. It is recommended that as you near retirement you meet with an advisor at least once for best results.
Many people are hesitant to hire a financial professional, even though it may be in their best interest. Some simple things that may get in the way are the discomfort in sharing personal information and fear of being criticized.
What is the cost of a financial advisor?
The fee a financial advisor charges is based on the services you take advantage of. Typically, if an advisor is managing your assets they will take a percentage of your commission. The more money you have invested the better your pricing should be. If they are hired for only financial planning they will usually charge an annual fee that will vary from firm to firm.
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Can I work with a Financial Advisor long distance?
As long as you are working with a trusted and experienced planner it does not matter if they work out of state. It is easy to have regular meetings with web meeting software and signatures can be obtained through fax or email.
Although technology does make it possible to work with almost anyone anywhere in the world, it is important to make sure the person you choose is knowledgeable in those areas that are important to you. For example, if you live in NY State, your financial advisor should have some understanding of how NY State taxes affect your financial plan and investment portfolio. But if you are in the market for an Investment Advisor or Financial Planner, there is no longer any need to limit your search to only those individuals in your community.
What certifications should my financial advisor have?
Advisors are required to hold different certifications depending on the state they work out of and services they provide. In New York State they must have a bachelor's degree from a regionally-accredited college or university and then they must register for the Certified Financial Planner (C.F.P.®) Certification Examination. While preparing for the examination they must accumulate 4,000 to 6,000 hours of experience in a professional setting. Once the examination is passed the advisor is to complete a C.F.P.® Certification Application in which they agree to adhere to a high standard of ethics and undergo a background check. Only after these requirements are met are they able to use the title of C.F.P.®
Can I hire more than one financial advisor?
Diversifying your advisors does not have the same positive effects as diversifying your investment portfolio. With multiple advisors you will be paying more and higher fees, going to many meetings throughout the year, and end up with an incomplete and imbalanced plan since your advisors are not handling all of your investments.