Even though a financial advisor will be managing your finances, your mindset should be: I must be still in control. When you choose to hire a financial advisor that does not mean that your responsibility is over. In other words, you see to it that you know what is happening with your finances even you have an advisor working for you.
You have to take some considerations into account prior to hiring:
1. Establish the scope of work you want your financial advisor to manage — do you want your money to be managed conservatively or would you prefer assertive management?
2. Clearly establish your schedules — do you want frequent meeting with your advisor or you want like every quarter? Every month?
3. Most especially that your business relationship with your advisor involves money, it is important that you conduct a background check. Check (a) if he is legitimate (b) his financial history (c) if there are cases of complaints filed against him. You can check it through BrokerCheck or Finra.
4. Asking for reference can also be an important step to have a more ideal advisor — you can ask his previous client.
5. When you talk to your potential advisor, tell him what your goals are – and what are his strategies to be able to help you accomplish those goals?
6.An ideal financial advisor is also willing to deploy other efforts to help you pursue your long-term goal (e.g. conducting periodic financial planning exercises).
7. Another important thing that you consider before hiring an advisor is to see to it that he has a succession plan in place or procedure to follow to transfer your account to another advisor in case he becomes unable to do his job for a certain reason.
8. You must also ask who the succeeding advisor is. Be sure he is also qualified — based on the standard criteria you have followed.
Above are some important things that you should consider prior to hiring a financial advisor. Be guided always.
Michael Hubbert is a financial advisor with LPL Financial, a member of SIPC (www.sipc.org). For a list of states in which he is registered to do business, please visit www.blog.finmastery.com