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What to Consider When Choosing a Financial Advisor

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Over the past nine months, all of us have gotten a lesson in the power of planning for the unexpected. Aside from health uncertainties, many of us were faced with making complex and tough financial decisions.

The proof showed up in the number of individuals — particularly younger investors — who decided to start working with a financial advisor in 2020. Between the periods of April and May 2020, which was the peak of the first COVID-19 lockdown, 22% of “Gen Zers” and millennials in the United States who didn’t have a financial advisor before decided to start working with one.

If you’re among the individuals who want to follow suit and seek financial advice next year, consider the following questions before beginning your search:

What Services Do You Need?

The financial services landscape is nuanced and the type of expertise you need can vary at different ages and stages of your life. It helps to start by asking yourself some key questions about your current and future financial picture.

For instance, are you saving for a long-term goal, such as a home purchase or your children’s college education? A financial advisor can help you develop and maintain a budget, create a plan for managing debt, and explore vehicles such as a 529 plan to ensure you make the most of your savings.

Are you preparing to save for retirement? Your financial advisor can help you develop your “retirement bucket list,” project health and long-term care expenses, explore withdrawal strategies for optimal tax efficiency, and even create a long-term investment plan aimed at future, sustained growth.

Other advisors offer specialty services such as tax planning, estate planning, and insurance coverage consultation, among others. It’s important to define exactly what you need first and tailor your search to advisors who specialize in those disciplines.

What Credentials Are Important to You?

Many financial advisors choose to pursue continuing education (CE) to bolster their expertise and provide more high-quality service to their clients. Two of the most prominent and respected designations in the financial services world are the CERTIFIED FINANCIAL PLANNER™ certification and the Chartered Financial Analyst (CFA®) designation.

All designations differ in terms of the examination process and the hours of experience required. Here are some of the other ancillary certifications you should keep an eye out for in order to find an advisor with a breadth of knowledge and expertise:

Certified Divorce Financial Analyst® (CDFA®)

Certified Public Accountant (CPA)

Certified Private Wealth Advisor® (CPWA®)

Chartered Financial Consultant (ChFC)

Chartered Retirement Plans SpecialistSM (CRPS®)

Personal Financial Specialist (PFS)

Ask Both Emotional and Financial Questions

Financial issues are complex, personal, and often can be very emotional in nature. It’s important to find a financial advisor who can not only provide the technical skills but the empathy and emotional bandwidth you need to feel comfortable with them.

To start, here are the foundational questions you should ask to get a strong sense of your advisor’s knowledge, skill level, and professional experience:

What designations do you have?

– How do you get paid? Do you receive commissions?

– Are you fee-based? If so, what are you doing for that fee?

– Is the fee flat, or is it determined by your clients’ assets under management?

– How do you approach investing?

– Do you rebalance your clients’ portfolios in volatile markets?

– How many clients do you have?

– Who will be working on my account?

– What is your approach to financial planning?

– What financial planning services do you offer?

– What kind of clients do you normally work with?

– Do you have any account minimums?

– Do you have any conflicts of interest in managing my money?

– How many times and how often will we meet each year?

– Will you collaborate with my other professional advisors (i.e., accountants, attorneys, etc.)?

Next, ask yourself these questions during and after interviews to ensure you can foster a deeper, emotional connection with your prospective advisor:

– Do I feel this advisor cares about me and my loved ones, as well as my goals?

– How is their bedside manner?

– How do they respond to adversity?

– Do they put my mind at ease?

– Are they cutting-edge? In other words, do they keep up on policy changes and how they could impact clients?

– Will they be proactive?

– Are they responsive when I reach out?

Don’t hesitate to interview multiple advisors until you find the right fit. It’s also a good idea to get referrals from your family, friends, or colleagues, as they can vouch for advisors from personal experience.

Finding an advisor to manage your financial life is an important step, and one that shouldn’t be taken lightly. At Shone Wealth Management, we recognize the critical role we play in our clients’ lives. Their unique experience, goals, needs, and values matter to us, and we pride ourselves on our relationship-based approach and our responsive client service.

If you’re interested in finding out how we can help you achieve your financial goals, contact our advisory team here.

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