Why look for financial advice?
Seeking financial advice has its benefits and by doing so prepares you for decisions that could change your life.
Sound financial advice can:
► help set your goals and map the road to achieving them
► maximize the use of your money
► provide you more control of your life and your financial standing
► avoid costly mistakes
► find a way to protect your assets
► make you aware of government help that you can avail
The bottom line is financial advice will assist you to plan what to do with your finances and pave the way to achieve the goals that you have set forth.
People who should seek financial advice
Professional financial advice is needed by the following:
► those who are already retiring
► those who are going to start a family
► those who have inherited money
► those who have lost money and do not want to make the same mistake
How to start when you are seeking for financial advice
Many are hesitant to talk to a financial adviser because they are not sure if it is really the best move. The hesitancy also comes from the expense involve for asking someone to make a comprehensive financial plan for you. The decision depends really on you and what kind of advice you need. But if you are really intent of pursuing a sound financial plan then a reputable adviser is what you need.
Tip: If you need advice because you have problems with bills or debts, find a financial adviser. Search for the nearest adviser in your area.
You can do your own research if you just need to know about financial product options and strategies or you need more information about what services are available for you.
There are hundreds of financial websites that can help you understand about finances.
Financial institutions like banks, credit unions and the like have people you can approach and ask about financial strategies. You can inquire about time deposits or savings accounts. This is a good move when you are bent on saving for a property or a buffer for your finances. Do research and ask around before you choose which financial institution.
General Financial Advice
General advice about financial solutions can be available from seminars or conferences by financial institutions. Such advice does not take into consideration your needs, goals or financial status. These are solutions that are usually stepping stones to other strategies.
Tip: Accountants can provide financial advice especially when it comes to taxation issues. Consult someone who has experience.
Personal Financial Advice
When you want advice specific to your actual need then a personal adviser is needed.
Types of personal advice:
► Continuing advice or consultations so that evaluations or assessments can be made on a regular basis
► Comprehensive financial plan to assist in goal setting and covers strategies like insurance and investments
► One-time advice on a particular financial issue
How to Choose a Financial Adviser
Before you start making an appointment or even calling financial institutions for their services, you need to do some basic research and follow the simple steps to a suitable financial adviser.
Step 1. List down possible institutions or people
Step 2. Check whether the people on the list are licensed or listed in a financial register.
Step 3. Ask for their Financial Services Listing
Step 4. Check the qualifications and experience
Step 5. Find out if they have experience on the type of advice that you need
Step 6. Ask and compare the fees or rates
Below are some questions that will help you choose the financial adviser best suited for your need.
- How long have you been giving financial advice?
- May I know what qualifications you have?
- What have your previous clients achieved?
- What is your method to get to know a new client?
- How do you handle a client with different financial objectives?
How to Work with a Financial Adviser
As soon as you have decided which financial adviser you want to work with then the next step is to avail of the service and get the information or data needed.
Before you sit down with your financial adviser, you have to list down what you own, what you owe, income and expenses and whatever insurance you have and for how much. The list will start you off correctly and you do not have to grope for data that the adviser would want to have.
Always provide accurate and real data about your financial standing. The financial adviser will surely want to know information in order to come up with a sound plan for you. Discuss what your goals are to give the adviser a good and clear picture of what you need.
From the information and needs that you will share with the financial adviser, a cost or rate for the service can be derived.
Be Aware of your Risk Tolerance
A financial adviser should be able to assist you in identifying an effective strategy in order to attain the goals that you have set in your initial meeting.
The strategy that would be presented to you should protect your capital and assets and not expose you to risks that cannot be handled by the strategy. Do not agree when you feel uncomfortable with the strategy or if it is too vague for you. Ask the financial adviser to explain and give you projections.
High returns usually come from high risk investments. Give each advice some thought and be sure to understand how it is done and what you expect in terms of time and money.
Sound and Clear Financial Advice
After meetings with your financial adviser, a written recommendation will have to be submitted back to you in another meeting. The adviser should explain to you why such recommendations have been made and why one strategy is better than others or why a product will be most beneficial to you.
The following documents should be submitted to you:
- Statement of Advice (SOA) – outlines the reason/s for the recommendation and why such move will let you attain your goals and objectives.
- Product Disclosure Statement (PDS) – if it is a product/s that they recommend for implementation then this statement will provide the features of the product/s.
Never sign anything or agree to what is being recommended unless you have gone through the statements and would be sure that it will work for you.
What you need to look for in the recommendation/s
A financial adviser is one full of confidence and you can be swayed by how they will present the solution that you are looking for. Do not get affected by the quality of the presentation but make time to read the statements carefully and at your own pace.
Financial advisers can only make suggestions. The decision will all be yours because it is your money after all.
Go over the paperwork that they have provided. Write down questions on terms and areas that you do not understand. The financial adviser should make everything clear to you in your next meeting.
What to look for in a Statement of Advice (SOA)
Questions on your objectives and financial need:
► Does the SOA address the reason why you sought for a financial adviser?
► Are the recommendations relevant to your need or is it a general one?
► Does the SOA refer to your actual assets, liabilities, expenses, income or does the value too far from the real amounts?
Questions about the scope and recommended strategy:
► If you asked for advice on a complex situation, does the SOA address this with strategic options and provide the benefits or disadvantages of each option?
► Does the SOA define the scope of the recommendation/s ?
► Is there a cash flow projected included in the SOA which you can refer to and check if it fits your financial standing?
If there are products involve:
► Is there a clear explanation why a particular product has been recommended?
► Are there product features included in the advice statement
Questions about the products:
►If the advice is to switch products, does it clearly state the benefits of the switch? Does it state what your loses would be?
►If it has product recommendations, does it explain where such product would fit into the scheme of the overall strategy? How about your risk tolerance?
Paying for Financial Advice