A financial adviser is the one who governs and manages the investments and savings of an individual. Simply put, they handle all the money you save from your earnings and make it grow. So, what happens to your savings is all dependent on the expertise of the financial adviser chosen by you. The role of financial adviser is like a job position and you are supposed to select the right candidate after properly interviewing them. But interviewing and assessing someone who has the expertise that you do not have is a difficult task. It is difficult to differentiate and pick out the genuinely skilled and talented adviser from the one who is merely a smooth talker. You may want to do some research of your own for this. There are some key questions to be asked, apart from the questions about experience and qualifications, and based on that the suitability of the adviser can be judged. Here is a list of the must-be-asked questions. The questions are so designed that the answers can help you to determine qualities like integrity and communication skills as well as the traits every good financial advisor should have.
#1. Who is your Ideal Client?
A good financial adviser always has an area of expertise. Of course, he or she is good with all the areas of financing but there is one area in particular that every adviser is an expert in. So, it is obvious that you would want a person with an expertise in working with people like you to handle your finances. For example, if you are in your 50s and the financial adviser you are talking to says that he works mainly with young families, then maybe he is not the right choice for you.
#2. Can You Explain a Particular Concept to Me?
When you are looking for someone to manage your finances which would determine your future, you are supposed to be able to clearly understand what the person says. To test the level of understanding you share with the adviser, you can ask him or her to explain you a particular concept of financial investments. You can ask about topics like active and passive investment, investment in stocks and bonds, laddered bonds, annuities, and all such topics. See if you understand the explanation or if it goes over your head. In case, you are unable to understand the explanation, you should probably look for another financial adviser as you need someone who can make you understand what is happening with your money.
#3. How Do You Profit from All This?
Asking this question is essential. Ask whether there is any initial planning fee, whether they charge a percentage of the assets under their management, or whether they profit from selling a particular product. In case they profit from you investing in a particular scheme, you probably should not hire them as they are more like a salesman than a financial adviser. Their advices would not be unbiased. So, it is better to go for independent financial advisers though they may cost you a little more.
#4. Can You Explain Your Investment Approach?
Each financial adviser adheres to a specific financial investment philosophy. So, when you enquire about their investment approach, you can get an idea of how they will manage your funds. There are advisers who have a high risk-taking factor and are experts in trading stocks back and forth, while there are some who have low risk-taking factor and believe inconsistent and long term returns and there are some who are moderate with the risk-taking factor. So, depending on your readiness to take risks, you can select the adviser whose investment philosophy is in sync with your needs.
These questions help you to determine with utmost surety whether a financial adviser is compatible with your needs or not.
About the Writer
This post is written by Joseph Webb. Joseph is an excellent blogger and philosophers, His keen observation to provide useful information which helps readers to get more ideas. He can be found on Facebook and on Twitter as @aussiesmag.