When it comes to financial planning, most people take a do-it-yourself approach. Most people don’t have a financial advisor , but does that mean the remaining minority who hire someone have more confidence in an expert managing their finances?
Here are 6 recommendations by epictrust.com to analyze if you can trust the person who is managing your finances.
Perhaps. But maybe not.
Many of these people may not fully trust that their adviser is always acting in their best interest. This distrust could even be part of the reason why some people decide to give up using this type of figure to manage their savings.
Beagle Financial Services, an expert in financial planning, points out that people see headlines in the media about shady practices by advisors. As a result, people “become wary of working with any financial advisor because they don’t know who to trust anymore.”
In this regard, what can an ordinary person do to improve the chances of working with an advisor they can trust? There are seven aspects that you could take into account to know if you can trust the person who is managing your finances .
1. Honesty about how to pay
Financial professionals get paid in a variety of ways, but the industry hasn’t always been willing to be compensated. Some are paid via commission. Some charge fees. Some establish a combination of commissions and fees .
Is it important to know exactly what you are paying for the services you have hired? , exposes Hobart. Clients are often hesitant to ask how their advisors make money. An advisor you can trust will have an honest and open conversation with you about this very important matter.
Therefore, if we pay a certain cost for your services and make sure that you do not receive benefits from another party, we avoid entering into a conflict of interest and make sure that we are offered a much wider universe of products so that we can choose the right one . that best suits our needs.
2. Trust if it encourages you to ask questions
?Any good relationship is based on open and two-way communication? , begins by explaining Hobart. Is your money.
You deserve to know exactly how it is being invested and why. But a good advisor will do more than answer your questions. He will also proactively provide you with information about your accounts, whether you request it or not.
3. He must worry about meeting you
Each person is different, with their own goals and dreams about the future. The financial plan that is right for you is not right for anyone else. Your advisor should offer personalized financial planning that suits your life , and should not tell you stereotypes that are the same for everyone.
Now, more than ever, investors demand honesty not only from individual advisors but also from larger financial institutions. There is no longer room within the industry for financial professionals who are motivated only by their own personal gains.
4. Avoid the so-called ?bargains?
The most appropriate thing is that you go to authorized places and that they are reliable. In Spain, the advisory service can be provided, according to the CNMV, “by securities firms and agencies, portfolio management companies, collective investment institution management companies and credit institutions” .
After deciding who is primarily responsible for advising you, consult the list of financial advisory companies offered by the regulator. In it are the companies that have authorization to operate and advise on financial matters. If you notice that there are costs that sound like a ?bargain? , begin to doubt. If not, you can rest easy.
5. Avoid Smoke Vendors
At the time you decide to hire the services of a financial advisor, you are relying on a professional who will guide you and manage the capital you want to invest. These experts will serve you to safeguard your assets in times of volatility or get a return on them in favorable market times.
If it does not promise you very high returns, then it is that it is doing its job well and is not selling you smoke. The normal thing is to obtain an annual benefit of between 6% and 10% . Above that percentage represents an excessive risk.
6. Put a face to your advisor
Despite the fact that digitization and contact over distance are on the rise now, when we are talking about our money it is very important that we have physical contact with our financial advisor. The closeness you have with him or her can be vital
In order to trust us and establish bonds of trust , it is best to hire the services of a professional who has an office closest to your home and thus meet at least twice a year.