Never skip getting a financial advisor. That would be a mistake. But do you know what would be a bigger mistake? That would be getting the wrong one.
The value of working with a financial advisor means ending up with 15% more money compared to people who handle their money all by themselves.
We have a lot to say about the no-ending debate that getting a financial expert is a waste of money but that’s for a different article.
In this post, we want to emphasize the need for getting the right advisor. Here are 7 mistakes that all of you need to avoid when getting one.
1. Getting A Financial Advisor That Doesn’t Act on Your Best Interest
Let’s get something clear. A financial advisor is a salesman. He is there to sell. It’s not that financial advisers are bad people but sometimes these things are part of the job.
But since you want to make the most out of your policy, it would be a good idea to be really critical with the person you choose to be a money manager.
Select the ones that have a real passion for the industry. These are the ones who are in on the job because they want to help people. The rest are there because it is the easiest way for them to make a decent income.
If possible, we would even recommend that you hire an advisor who is a close friend of yours; someone whom you know will not lead you astray.
2. Hiring The First Advisor You Meet
Whether you agree with us or not, getting a financial advisor is actually one of the most major life decisions in a person’s life.
With that, you cannot just randomly choose an advisor. The moment you meet one, make sure to keep your options open. We recommend that you look into at least 10 financial advisors.
Of course, you’d have to slowly break the list down. But the important thing is that you take the time to get to know the person. That way, you will know early on how he intends to operate and which advisors have the best policies.
3. Choosing an Advisor With Irrelevant Specialties
Some people want to get insurance because they want to save up for retirement. If this is your goal, you should probably look for a financial advisor who has expertise in retirement.
But this is not what you’re looking for then you should not commit to one who only has knowledge about this sort of thing.
Let’s say that you are more interested in getting your house or car insured. It would be the best course of action to look for an advisor who focuses on these types of insurance. That’s how you make the most out of your money. After all, getting a financial expert is a commitment. If you are tied up with the wrong advisor then you will surely lose a lot of money over the years.
4. Picking an Advisor With Poor Strategies
What do we mean by poor strategy? A strategy is poor if the course of action that is being recommended is not compatible with what your goals are.
You will be able to tell if the advisor has a poor strategy when you go to your meeting. Which meeting? Well, that would depend on your discussion.
There are very few advisor meetings that are finished in one sitting. Most likely, you are going to have to meet with your financial advisor about thrice.
Listen to your advisor and then you will have a pretty good idea of what he wants to happen is compatible with your vision.
If you commit to an advisor with a poor strategy then you are going to have a lot of regrets in the long term. It would be best to be well-informed from the start.
5. Getting a Financial Advisor Without Looking at Their Credentials
Financial advice is not a joke. You don’t get to make money giving advice about money if you don’t know what you’re talking about and then call it a day. That’s not how it works. That’s not how it should work. And it is your job to make sure.
Before you sign a contract with someone, make sure that you have seen his credentials. For one thing, you need to make sure that the person with whom you are talking actually has a license.
This is one of the most critical qualifications of being a financial adviser. If the financial adviser does not have a license then this means that he has not passed the qualification or worse, he has never been trained at all.
Apart from the license, you also need to ask for credentials about his expertise. Let’s say the person is an insurance agent for home insurance, car insurance, life term, or health insurance. You should be able to see the proof that he was able to do what he claims he can do.
6. Hiring a Financial Advisor Without Knowing How the Latter Monetizes the Relationship
Being a financial advisor is not a one-size-fits-all agreement. Different advisors prefer to be paid in different ways. Some prefer commission. Others require a rate per session.
Make sure that you know what you are getting into before you sign an agreement. This is important because you don’t want to be in a lot of debt just for getting an advisor.
The purpose of getting a financial advisor is to make better financial decisions. But if you make this one mistake, your life could take a turn for the worse.
Getting a financial advisor could be the turn of the century for you. Or it could be the worse decision that you have ever made. We want to help you not fall into the latter. With that, we hope that you gained a lot of insight from this article.
What’s your biggest takeaway from this post? We’d love to know in the comment section.
Enjoy this video that discuss the subject further: