By Ryan Paulin
Hiring a financial professional to handle your financial affairs is a major decision that is not to be taken lightly. A lot of factors and considerations will affect in your choice. There are people who in fact choose fee-only financial planners to manage their assets and give investment guidance.
What is a Fee-Only Financial Planner? These are financial planners who charge a specialized fee only for financial planning services and these are paid directly by their clients. They do not receive any additional compensation or commission out of the services that they render.
One of the questions you should ask your fee-only financial planner is the length of time they have been in the business of financial planning. Experience and integrity is very important since the relationship created involves trust and confidence. Knowing the track record and proven competence of your fee-only financial planner is a must. It is also important to find someone who will put your interests ahead of their own so find someone without any conflict-of-interest with any company.
Academic and professional competence of a fee-only financial adviser is important since this will affect the outcome of his or her advice. This will also affect the quality of service that they will provide for you. Also, the more experienced the financial planner is the better since they will be less likely to be shaken by rough times and have more knowledge in fixing particular problems in the business.
The primary job of a fee-only financial planner is to come up with a long term investment strategy. He or she has to make sure that this plan will be properly implemented so the next question you have to ask is his or her qualification to get the job done. Inquire about his or her academic qualifications, credentials and licenses if there is any. Ask if they can handle pressure under good and bad economic times. Demand for a copy of their ADV Form II to see if they have been sanctioned in the past or given any disciplinary action in relation to their work.
Another important question is the mode of compensation they expect from you. How are they compensated? This is vital in determining whether or not you can afford their services or if you will be comfortable with the payment set-up. Fee-only financial planners are more likely to give you sound and impartial advice since they are paid regardless of your choice of investor. Those who are commissioned based may have a conflict of interest and may not give you the financial advice that you need.
You should also ask regarding the services the fee-only financial planner is willing to provide. Is he or she adept with tax laws and regulations? Can he or she provide complex advice involving various financial issues? As your wealth grows the management of your assets becomes more complicated. Finding someone who can multi-task might be a good option for you.
Ask also for licenses and certifications. Planners need to be registered in accordance with state and federal laws. Check out if your fee-only financial planner meets the qualifications set by your own state.
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