Similar to finding the right hairstylist or a personal trainer who understands your needs and goals, hiring a financial advisor requires discernment and vetting. With 2021 already underway, now is the perfect time to take a look at your finances and consider where you want to be a year from now. If you’re like most Americans, acronyms like CPA, CFA and CFP can all begin to run together when considering hiring a professional to manage your wealth. Thankfully, however, the first step in finding the perfect financial advisor doesn’t begin with decoding an acronym.
“The first step is understanding your specific needs,” explains Emily Dafferner, a CERTIFIED FINANCIAL PLANNER™ with Reliant Investment Management. “Do you need something comprehensive or specific? How about someone to just manage a portfolio? The answers to these questions will help determine what direction you take.”
Common financial goals that women might have, Emily says, could be saving for retirement, getting help with taxes, planning for kids’ college, or simply making sure their money is growing and working for them through effective investing. If your goal is singular — like getting help with taxes or just general personal accounting — then a Certified Public Accountant (CPA) could be a good fit. If your financial goals are more complex, then a Certified Financial Planner (CFP) might be best. For folks specifically in need of portfolio management, a Chartered Financial Analyst (CFA) is often used.
Once you have a list of needs determined and an idea of what kind of professional you need to meet with, then the “interviewing” process can begin. Emily says not to be afraid to be choosey when it comes to hiring a financial advisor. After all, they’re managing one of your most important commodities: your wealth. “It needs to be a good fit for both parties,” she says of the client-advisor relationship. “It’s not about the credentials all the time. You shouldn’t be afraid to ask the tough questions. It has to be a relationship that you are really comfortable with.”
When picking out a financial advisor, some good questions to have ready are how the advisor will be paid, if they operate on a fiduciary level, if they work with clients who have similar goals to yours, what a typical meeting will look like, how often they’re able to meet, and if they’re willing to collaborate with other advisors you might already be working with.
The importance of making sure your advisor works on a fiduciary level, Emily says, is paramount. “Under that standard, those advisors are obligated to act in the client’s best interest at all times — they’re bound to do that legally and ethically,” she says.
If you want to get a good grasp on your wealth, it’s never too early to begin seeking out the skills and resources of a professional. For Megan Canning, a young professional, hiring a financial planner gave her the peace of mind that her finances are managed properly. Hiring financial professionals, Megan says, has allowed her to “not stress about future finances because I’ve gone over goals and plans with my team and know that the plans we have in place are working behind the scenes to ensure my future is financially stable.”
Emily says it’s estimated that in most scenarios, hiring a financial advisor ends up saving clients a significant amount of money on an annual basis. Plus, there’s the added assurance that your wealth is being managed correctly and effectively. Megan echoes this sentiment. “Working with professionals is the best way to make sure that something is done correctly and to learn the ins and outs of financial planning,” she says. “I encourage all women to seek some financial planning guidance as early as you can because you don’t know what you don’t know — and to make sure you feel comfortable discussing the details of your life with your advisor(s) because they need the full picture to best serve you.”
A good financial planner should be more than just a financial consultant. They should be able to navigate life changes, economic crises, and any other curve balls life may throw your way. (And if 2020 taught us anything, it’s that there will always be unexpected events that arise.) If you have a solid financial planning team in place — one with your best interests at heart — then managing finances can be one less thing to keep you up at night. “A good financial advisor will walk through life with you,” Emily says. “Financial advisors who are worth their salt, they’re not giving just financial advice but also perspective and emotional support and rational logic in the midst of economic turmoil. Advisors can help steady the ship in the midst of a storm.”
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