You may think that financial advisory is something that should only concern large organizations. However, you can benefit from the services of a financial advisor just as much as them, especially if you’re one of the many small business owners in Roseville. A financial advisor is a financial expert that helps individuals and organizations manage their money and make smart financial decisions. With the help of a financial advisor, you can make a retirement plan, manage your savings, find a way out of debt, make investments, and manage your small business.
Many financial advisors work independently on a consultancy basis, while others work in financial management firms that provide accounting, tax, and bookkeeping services. In California, there are two exams that financial advisors must earn in order to become licensed by the SEC to deal with financial securities. However, basic financial advisory requires no specific qualifications, and a bachelor’s degree in any major is usually sufficient. While this is great for people with a natural knack for financial management, it also opens the door for amateurs to swindle people by posing as expert financial advisors.
If you’re considering hiring a financial advisor for your personal or business needs, you need to make sure they are the real deal as well as the right fit for you. To make this process easier, look for these signs to know that a financial advisor is your best match.
- The Services Match Your Needs
The first thing you need to consider when looking at hiring a financial advisor is whether they meet your needs. For example, if you’re looking for financial advisory services for your small business in Roseville, California, you probably want a one-stop solution that offers tax, bookkeeping, and accounting services all under one roof. If that’s the case, you can opt for the services of a Roseville bookkeeping service and financial management firm that caters specifically to small businesses in need of financial advisory.
On the other hand, if you want help to manage your personal finances, a private consultant may be better suited to meet your needs. The individual attention a personal financial advisor can give you goes a long way in building a relationship.
- They Know Their Work
The next thing you need to identify is whether the financial advisor you’re considering knows what they’re doing. Keep in mind that it’s easy for many inexperienced individuals to confuse you with fluff and empty technical terminology. However, a truly competent person will try to make the consultation process as easy and simple for you as possible.
Alternatively, if you opt for hiring a financial management firm, make sure they are certified by bodies such as the California Tax Education Council. With a reputable professional firm at your disposal, you can rest easy and calmly, knowing that your financial needs are looked after.
- They Understand You
A financial advisor works closely with you and knows all your personal and business financial matters. You put your future in their hands by allowing them to make important decisions for you. Therefore, your financial advisor must understand you and your priorities. After all, a good financial advisor helps you manage money, but a great financial advisor helps manage your life.
For instance, your financial advisor may come across an investment opportunity that promises great returns in five years. However, you may have a significant personal expense due next year for which you need to utilize your savings. Regardless of how good the returns on your investment turn out to be, your inability to access your money at a time of need will be the only thing you remember. Therefore, it is essential to assess whether the financial advisor understands your needs and priorities.
- They Are Transparent About Fees
Financial advisory services are a little pricey. However, the comfort and ease they provide you with make it worth the money. However, what matters when choosing a financial advisor is that they can be upfront with you about their fees. The moment a potential financial advisor shows hesitancy in providing clarity regarding their charges, your guard should be up.
Generally, financial advisors only charge an hourly/ retainer base advisory fee. In addition to this, your financial advisor may bill you for transaction fees or expense ratios, which are charges related to your investment. However, there is no fourth fee, and anything else that your financial advisor bills you for is likely a hidden charge. A simple test is to ask the consultant to give you a breakdown of their charges in writing.
- They Make Realistic Claims
Market conditions are the definition of unpredictable, and the only thing anyone can say with certainty is that there is instability and uncertainty. Even the best and most competent financial managers and analysts accept this reality and are clear that there are no guarantees, and all their decisions and advice are based on predictions, at best.
Therefore, the moment a consultant claims that they have a foolproof plan to beat the market and guarantee returns, you should make a run for the hills. Remember, if it sounds too good to be true, it probably is.
- They Don’t Have a Vested Interest
A financial advisor must be impartial to your options to look out for your best interests. In technical terms, this is called working solely in a fiduciary capacity. However, the majority of financial advisors today work in a dual capacity, both as an advisor and a broker. That means that if you invest in a certain fund or place, your advisor may be earning a commission on it.
The right financial advisor will avoid getting caught up in this cycle to retain their client’s trust. Therefore, make sure you ask any potential financial advisor whether they work solely in a fiduciary capacity or not.
Conclusion
Hiring a financial advisor is a big decision. While your willingness to organize your finances and plan for your future is a wise decision, you must make sure you find the right match for yourself. An incompetent or incompatible financial advisor can make your life more difficult instead. Therefore, make sure you choose the right person for the job by looking out for the above signs.