Benefits of Hiring a Financial Advisor for Business
Are you planning to hire a financial advisor for you/your business?
Choosing a financial advisor has a significant bearing on the financial outcomes. A correct choice of advisor brings you closer to your financial goals whilst a wrong one can topple things down for you.
You should be briefed about financial advisors before making a decision:
Financial planners/advisors are always qualified
Anyone identifying himself as ‘financial planner’ may not be qualified, might not have passed tests or he even might not have the related experience because financial planner is not a regulated title for financial advisors
. Any person can use this term according to his wishes as no certification or degree is accredited with the term.
So, its advised when you meet a so-called financial advisor or planner do have a look at the person’s business card to find out whether it has some letters after his name, which indicates his financial certifications. A few certifications for financial advisors are the CFP, CFA, FRM, CMA, stock market certifications or an MBA degree in Finance; advisors must meet rigorous educational and experience requirements to earn these valuable and coveted titles.
Financial advisor always put your interest first
Financial advisors must adhere to fiduciary standard. The fiduciary standard was set-up as part of the Investment Advisers Act of 1940. A fiduciary is required by law to always act in the best interests of his or her clients and place clients' best interests before his or her own.
But, lamentably, all the financial advisors are not fiduciaries, and nothing can stop them from putting their own interest before their client’s interest. Such an advisor might recommend a product that pays huge commissions to him however it might not be the best product for you.
So, you should positively ask the advisor whether he or she is a fiduciary or not, before you hire one. Never hire one who isn’t a fiduciary.
Financial advisors need to have clean records
A financial advisor needs to toe some lines, they might lose their certification in case they misbehave in certain ways. They lose their titles of CFP or CFA. Even after losing their certification they might continue to work as financial advisors.
So, again as advised earlier, you should enquire about their certifications and go only with the ones who have these certifications with their names. You can also check references from their past or current clients. You can also verify their records on some online portals.
Few financial advisor don’t charge money
Few financial advisors might lure you by saying that they don’t charge you any fee and will advise you free of cost but there is a bait in this. These are the ones that cost you heavily for such advise. Because they are making money from the brokerage or commission on the products that they advise you to buy.
Therefore, whenever they are selling you something, there is a conflict of interest. Because he or she is a commission-based consultant and will only recommend you products in which he makes the most profit for your benefit.
Hence, the financial advisors who charge fee in percentage of your financial balance being managed, and investments done accordingly, will always keep your interest in the forefront. These are motivated to do better as their fees increases in proportion of your growth of investment, which creates a win-win situation. Thus, fee-only advisor turns out to be the best choice.
So its beneficial to hire a financial advisor in business and before choosing your financial advisor keep the above points in mind. Hope you make an informed decision now.