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How to go about Hiring a Financial Adviser

By Sadiya Anjum


A financial adviser is a consultant offering his services to cater to your financial needs in terms of budgeting, investing and financial planning. You may hire a financial adviser for various reasons – either because you do not have the time to do the job yourself or feel the need for some professional advice. Whatever your reason maybe, hiring the first financial adviser you see in the yellow pages or the one your neighbor recommended may not be such a smart idea. An incompetent or fraudulent adviser could waste your time, money and may even lead you to financial loss.

To hire someone competent and honest, follow these simple pointers. Firstly, understand your own needs and goals. Why are you hiring a financial adviser? Finding your answer will help you gauge if the person you are interviewing is qualified to fulfill your needs.

Educational backing is extremely important. There are several designations and certifications qualifying financial advisers today. Holding a nationally recognized designation is important. The most popular ones include Certified Financial Planner (CFP), Chartered Financial Consultants (ChFC), Personal Finance Specialist (PFS), and Chartered Life Underwriter (CLU). Each of the above requires rigorous training and each certificate represents a specialization in a specific area. Depending on your needs, you can hire a professional qualified in that specific area. Even if a financial adviser holds a degree in some other subject, do not be too quick to dismiss him. It may be sufficient as long as he has other educational certificates qualifying him for his area of expertise.

To be on the safer side you can hire someone with a lot of experience. Hiring someone who is fresh will give you the advantage of lower costs but his lack of experience may be a disadvantage. But even for an experienced person, you need to check if he has managed other portfolios similar to yours. You also need to ask for references and talk to previous clients to see how well he has performed.

Your financial adviser should listen to you and understand your financial goals. So find someone who can do just this. Ask other questions like, how often the person will contact you? will they only correspond when a problem has occurred? etc. An adviser from a company is most likely trying to market his firm’s products/ services and may push you in that direction. Your adviser should represent a certain degree of independence and put your needs first.

The most important thing you want stated upfront is costs- fees or commission? Hiring someone based on fees is to a certain degree safer. But if you do hire someone based on commissions, he should not charge you over 1% of your assets. The smart thing to do is to draw up a financial plan your self and hire an adviser to go over it and make suggestions.

Even after you have hired someone, always stay involved. Regardless of what the situation is, do not give him ‘power of attorney’ over your investments. If he recommends any financial institutions, do business with them directly. Also get all your statements and documents mailed directly to you.

We all require some amount of professional help to see us through at some point or the other. But hiring someone who you can trust and is competent is essential. After all, you are paying for his services and you deserve someone who is worthy of it.

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