Personal Financial Advisor

Considerations On Selecting A Personal Financial Advisor

There are many options that an individual can select when choosing to make the best choices regarding the investment and shelter of their financial resources. Some of those choices include the development of a budget, eliminating credit card debt, or enrollment in a regular savings plan. Examples of a regular savings plan could include investment in a 401(k) plan or maximizing an IRA.

If an individual is not comfortable handling their own finances they may choose to engage a personal financial advisor. If looking to engage a personal financial advisor there are a number of critical steps that can be taken in choosing the right personal financial advisor.

Referral

Often the best way to engage a personal financial advisor is through referrals. These referrals can be through friends, family, business associates, etc. Referrals are one of the better ways to engage a personal financial advisor because people that you know and trust have a positive experience with the personal financial advisor that they are recommending.

Fees

When searching for a personal financial advisor it is important to keep a number of factors in mind. Obviously, people have chosen this career path as a way to make a livelihood. In order to make a living by offering personal financial advice to others it is important that they charge their clients for that service.

Therefore, it is important, from the beginning, to understand what fees are being imposed by the personal financial advisor. There are a number of ways that an individual can charge for their time and expertise. Some of those ways of charging a fee could include an hourly rate, a set annual fee, or a percentage of their client's assets.

Generally, an hourly rate or a fixed annual fee is preferable. However, if one chooses to hire a personal financial advisor using a percentage of the assets it is important to be perfectly clear from the beginning as to what that percentage will be. Generally, 1% is a customary and accepted fee in regards to the percentage of the customer's financial portfolio.

Other Considerations

A few other considerations to take into account include any professional accreditation that the personal financial advisor has received. One such accreditation to look for would be the National Association of Personal Financial Advisers or NAPFA.

In addition, it is important to remember that no one will care for an individual's money more than the individual themselves. Therefore, it is important to at least monitor the activity of the personal financial advisor and better yet to learn how to invest one's own personal resources.