I share with you below my top 3 tips that will help you make a wise and informed decision when you’re looking for a financial adviser.
Find out if the adviser is an independent or a ‘tied’ agent?
If they are a tied agent they are bound to the company that they are employed by and will only recommend that company’s products and services. Although their products and services might be good, they may not be suited to your needs, but they will recommend them anyway because they cannot recommend products or services from outside of that company.
Because a tied agent can only sell the products from the company they work for their advice can be biased. However, if that company has a great product that is very suitable for your needs then this shouldn’t be a problem. A good agent should tell you if they are a tied agent, but it doesn’t hurt to ask if they don’t tell you up front.
An independent agent will not be tied to one specific company but will work independently and can sell products and services from several different companies. Even though they have a bigger range of products and services to recommend, they may still be biased and promote the product or service that will earn them the highest commission.
Both independent and tied agents have advantages and disadvantages and a good, honest adviser will want to do what is best for you and not what is best for him. It is helpful if you do your homework and have some idea of what you want so you will know if their recommendations would be suited to you and your family.
Find out how the adviser makes their money.
Many financial advisers will work on a commission basis and as such they may try to sell you higher priced items to earn a higher commission. They may also contact you whenever they are trying to make a sale rather than contact you to follow up with your investment plan.
Find out just how qualified the financial adviser is
Find out whether they are experienced in just one area or whether they can help you with all of your financial needs. If you find an adviser that specializes in one particular area but can’t help you in other areas then you might need to find another adviser for the other areas of financial advice. This can be more costly if you have more than one adviser working for you. There are many financial services that will be able to help you with all of your financial needs in one place.
I find that these three tips are the important factors to consider when choosing a financial investment adviser. Remember that they will be working for you so take your time to choose someone that you believe is right for the job.