Working with a financial advisor has a lot of benefits. For one thing, a financial advisor can bring you peace of mind if you’re feeling shaky about your financial situation. Beyond that, they can do everything from set up your investment portfolio to help you budget to make sure you have the right insurance in place.
But it’s important to find a financial advisor who actually serves your needs. And in this Reddit post, we have a women in her early 20s who has clearly had a bad experience with a financial advisor.
She says that as a new investor, she sought the help of a financial advisor, only that person was “less than perfect” in terms of treating her as an equal.
It’s a shame that the poster had to go through this. But that doesn’t mean she shouldn’t try again. However, there are certain things she should look out for.
It’s a matter of getting the right fit
If you’re going to pay for a financial advisor, then it’s important to find a suitable person for the job. And to that end, there are a few key things to look out for.
First, make sure they have decent experience. This isn’t to say that someone fairly new to the job won’t be good at it. But it’s important to have confidence in the person you’re appointing to manage your money.
Next, make sure they understand your goals and treat you with respect. If not, run the other way — even if they have a solid track record of being great at their job.
Furthermore, it pays to find a financial advisor who’s a fiduciary. A fiduciary is required to put your best interests first at all times.
This is an important distinction. A financial advisor who is not a fiduciary can recommend investments to you as long as they’re suitable. But they don’t necessarily need to be the best ones for you. A fiduciary must recommend the absolute best investments for you, even if it makes them less money.
Questions to ask a financial advisor before hiring one
I do hope the poster above gives another financial advisor a chance. But I also hope she finds the right match.
If you’re in the market for a financial advisor, in addition to looking out for the things mentioned above, you may want to ask these questions of anyone you interview for the job:
- What licenses or certifications do you have?
- How often do you meet with/communicate with clients?
- What’s your preferred style of communication?
- What does your fee structure look like/how will you make money off of me?
That last question might seem crass, but it’s an essential one. And your financial advisor should feel comfortable answering it honestly. It’s important to know what your financial advisor will cost you, and they should be open about their fees so there’s zero confusion.
Remember, too, that you’re not necessarily signing a lifelong contract with a financial advisor. If you try one and they don’t work out, you can always make a switch. But the more questions you ask from the start, the better your chances of choosing the right person to begin with.
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