Financial Consultant

How to Select a Financial Consultant

The term financial consultant is now known by other names such as financial advisor, planner or coach. Many of them are qualified on paper. But only a select few can give you sound financial advice with regard to your investment and savings. Here are some criteria you should consider when choosing a financial coach.

Academic Credentials and Hands-on Experience

The prospective candidate’s educational background might prove suitable for your financial condition. At the same time, the work experience of a financial consultant could provide the appropriate solution to your investment strategy. You can gain insight about them through the articles they write and publish in websites and blogs. The candidate’s work credentials and other relevant data are also available from the SEC or other regulatory bodies. Financial planning organizations such as FINRA have online tools you can use to verify the advisor’s credentials.

Check the Certifications

Financial advisors are required to update their knowledge and are given certificates to prove it. These certifications help you gauge their expertise in certain matters such as personal finance, portfolio management, accounting, taxes, and investments. Some financial advising groups require its members to take up exams, coursework, and workshops in earning their certifications.

Interaction with a Financial Planner

The frequency of the interaction and the person you will be dealing with are equally important. Some financial coaches would counsel you only once a year after the initial meeting. Others would conduct several meetings every year to assess the success of the financial strategy that they are recommending. Before agreeing on anything, tell the advisor your preferred way of interaction.

Financial Planners that Look Out for You

Registered financial advisors are bound by law to uphold your best interests since they are considered as fiduciaries. On the other hand, advisors employed by the bank or brokerage firm are accountable to the suitability standard. They will recommend a financial strategy that is suitable for you but not exactly in your best interest. Most financial coaches would claim some fiduciary status. But it’s up to you to ascertain if your advisor is acting as a fiduciary when handing advice and recommendations.

How Advisors Receive their Fees

You should also find out how your financial planner is compensated to avoid any potential conflict of interest. Advisors are paid by fees agreed upon, commissions or a combination of both. Many experts recommend working with a professional who charges a flat rate rather than commissions. Clients should also review the kind of fees they are paying for the investments. There are instances where planners will trade portfolios to funds with higher front or back-end charges.
Choosing the best financial coach for you depends on several factors. The candidate must have a solid educational background backed by relevant experience in financial planning. Certified advisors that are well-versed in the current financial strategies are the best choices. Choose a professional who can meet you according to your schedule. It is also a good idea to choose a financial consultant that charges a flat rate with no conflict of interest over his or her recommendations.

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