A Financial planner can be seen as a professional who helps an individual or an organization create a strategy to meet their long terms financial goals. A financial planner would help map plans for budgeting, saving, investing and retirement planning.
Financial planners might be brokers or investment planners, insurance agents, accountants, or individuals with no financial credentials. That is why you must watch out for or perform some level of due diligence before handing your money over to a financial planner.
Also, a financial plan is liberating for you and your family. It is a strategy you set to meet your financial goals. With a financial plan, you can manage your cash inflows and outflows and properly forecast future financial needs. So here are 5 mistakes to avoid when selecting a financial planner:
- Hiring a financial planner on sentiments: you should hire a financial planner based on your current and future needs, not on existing relationships like a banker you have known for many years. The person must not only be qualified to handle your financial needs but someone discrete, you don’t want the whole world to know about your financial status.
- Not asking about credentials: it is essential to ask your financial planners about credentials, licenses, or their tests such as series 7, series 66, or series 65. Knowing about their credentials would give you a sense of security about who you are let into your financial space. It is also essential to check if your planner is registered with SEC (Security and Exchange Commission). We really do not need any stories that touch the heart.
- Confusing brokers with financial planners: brokers handle part of your financial life (your investments) but are not charged with handling your long-term financial plan. A good financial planner would look at your whole financial picture; insurance planning, estate planning, tax planning and lots more. Also, brokers have a body known as FINRA.
- Failing to discuss philosophies: an investment philosophy is a set of beliefs and principles that guides an investor’s decision-making process. It is more like a set of guidelines and strategies that considers one’s goal, risk tolerance, expectation, and time horizon. So, there are guidelines to guide you, but it is not a must to always follow them. so, you want to have a discussion with your financial planner to know how he or she intends to help you reach your goals, how they would handle a down market and deal with overall changes in the economy.
- Blindly following your financial planner: A good financial planner would have a series of discussions with you about your long-term goals, income, and financial situations before laying out suggestions and solutions to pick from. So, if your planner gives suggestions and solutions without any prior discussions you should be cautious.
Summary:
People often focus on their finances when life changes happen or tragedy strikes, but just like an annual check with your doctor, it is important to make proactive plans for your finances.
https://apofinancial.com/top-5-mistakes-to-avoid-when-selecting-a-financial-advisor/
