AseanOutlook.com – If you’re thinking of hiring a financial advisor, then it’s obvious as to why you should know about financial advisor definition, as well as the way to differentiate between the good ones, and the bad ones. Because of course, there’s a good and bad financial advisor in the market.
Financial Advisor Definition
A financial advisor definition is a person who analyzes their client’s current financial status and helps said client set reasonable, achievable financial goals. Financial advisors can help address a wide array of questions from their employers competently and consistently.
For someone to be qualified as a financial advisor, one must have expertise in tax planning, asset allocation, risk management, retirement planning, and estate planning to help their clients at all stages of life under the different circumstances for each person.
There are some cases where financial advisors can act as a fiduciary for their client, meaning that they have permission to make decisions on the client’s behalf without consulting for their approval first.
Why would you need a financial advisor?
After understanding the financial advisor definition, it’s common for people to question themselves why would they need a financial advisor in their life. And while it’s true that most people don’t need a financial advisor to manage their finance.
It’s still an undeniable fact that financial advisors have helped millions of people get financially organized and help them make an educated life decisions.
For example, financial advisors can help you invest in something or helps your retirement plan goes smoother if you’re one of the many people that finds these tasks arduous.
It saves so much stress and manhours to do one yourself, as such it makes the cost of hiring a financial advisor worth it for you.
How to tell between the good and the bad
We’ve gone through the financial advisor definition as well as why you might need one for yourself. And right now, you might be thinking of getting one yourself, but before going that, it’s very important to know how to tell a good financial advisor from a bad financial advisor.
Because trusting someone with your wealth and investment very scary overall, and if you trust it to the wrong person, it can ruin your life and/or career.
To avoid such charlatans, here we have 5 traits that all good financial advisor shares
- They follow the fiduciary standard and prioritizes you first
We’ve mentioned fiduciary already above in the financial advisor definition, and it’s a scary concept to think about indeed. As such, you’d want an advisor that’s a true fiduciary, in other words, an advisor that prioritizes you, their client above their own. This includes making a decision that helps you, even if it costs them.
- They’re transparent about how they got paid
The best financial advisors in the market are those who are clear and upfront about how they got paid. And the ideal scenario for you as a client is that they’re compensated by you, and not big financial firms. Some financial advisors may be paid in a way that creates a conflict of interest, which you obviously don’t want.
- They focus on motivating you
Another trait that’s shared among the best financial advisors is that they don’t just create plans and help you stick to said plans, they also energize and motivate you to meet your goals in the long run.
Because let’s be honest, the best financial plan that someone could concoct for you don’t matter one bit if you have no determination to see it through.
- They shape a plan that meets and helps your needs.
Everyone walks into their financial advisor with different situations, goals, and circumstances. A good advisor listens to you wholeheartedly and shapes their financial plan around your requirements.
- They’re clear about your relationship
When you hire a financial advisor, you want to be clear on the relationship. Things like who you’re going to be working with, how often you will meet, how will you pay the advisor. The best financial advisors will be interested in your welfare and detail what you need to know before you decide.
That’s all the time for today about this article regarding financial advisor definitions, reasons to hire, as well as how to differentiate the good and the bad. Thank you for reading, we’ll see you next time.
