The New Year is an excellent time to review your finances, set goals, and ensure you are on track for the future. But if the thought of mapping out a financial plan is overwhelming, there’s no need to go it alone. There are qualified professionals who can help guide you through everything from setting a budget to choosing a mutual fund and ensuring you have coverage for the unexpected. The key is to find the right match for your individual needs.
Professional advisors work in many fields and hold various titles, including financial advisor, financial consultant, registered representative, investment advisor, financial planner, accountant, estate planner, insurance agent, stockbroker—or some combination of those. It’s not uncommon to meet an insurance agent who’s also registered as an investment advisor, or a stockbroker who engages in the practice of estate planning. With so many possibilities to choose from, it’s important to remember that not all professional advisors are equal. So here are five questions to ask during your search.
Question 1: What financial services does the financial advisor offer?
It’s important to first determine whether you need investment counseling, total financial planning, estate planning, and/or tax preparation. Most professional advisors do not offer a complete array of services, so it’s common for them either to have relationships with outside advisors who can address the areas not serviced or, if their firm is large enough, to have someone else in their firm handle separate services.
Question 2: How much and what type of experience does the financial advisor have?
Find out how long the advisor has been in practice and how long they have been in their present role. A follow-up question could address the advisors' specific work experience. A tip: do not be fooled by age. Many advisors who enter the business late in their careers have as much (or as little) to offer as someone straight out of college.
Question 3: How ethical and trustworthy is the financial advisor?
This question is obviously very subjective and may not be easy to answer when you first meet potential advisors. This is where a friend’s or family member’s referral can be helpful. You can also review your potential advisor's regulatory records by contacting FINRA (Financial Industry Regulatory Authority).
Question 4: What are the financial advisor’s investment processes and philosophy?
Ideally, you want to work with someone whose planning and decision-making style matches your own—whether you’re ultra conservative or like taking bigger risks. Any advisor you’re considering should incorporate asset allocation into their investment philosophy and apply it to their portfolio management process. Ask if they adopt a plan for building an optimal portfolio, and make sure they know your investment preferences.
Question 5: How is the advisor compensated?
There are many ways an advisor can be compensated: commission, a percentage of a portfolio's market value (asset-sized fee), hourly fees, fees for individual services performed, or any combination. There’s no right or wrong fee structure. The best fee structure is what makes sense and is the best fit for you. Most advisors will be able to provide the investor with a written document outlining their fees. If an advisor cannot provide this, move on. Don't be afraid to ask about fees upfront.
Make an appointment for a complimentary consultation
Now that you’re armed with the right questions to ask, it’s time to start looking for a financial advisor who best suits your needs. We encourage you to start right here at the place you already know and trust—your Credit Union.
As a Member, you have access to a full suite of investment and retirement products through Orange County’s Wealth Management, including Roth, SEP and Traditional IRAs, 401(k) rollover/pension plans, life insurance mutual funds, and tax-deferred annuities. During a complimentary consultation at a branch near you, one of our seasoned advisors can review your current financial status, help you goal-set, and guide you through every step of your plan, making adjustments along the way to keep you on track. Our Financial Consultants hold themselves to the highest ethical standards while offering personalized service and common-sense strategies that always keep your interests at the forefront. Whether you’re starting at the beginning or looking for continued guidance, contact us at (714) 885-7599 to schedule your complimentary appointment.