How to find a financial advisor or planner at any age

When thinking about hiring a financial advisor or planner, age is important: that is, your age and what your needs are at that stage of your life. Throughout his life, goals, income, and circumstances will pull him in a thousand different directions. The financial advisor you have at age 29 may not be the right one for you as you near retirement. The adviser who helped you save for your children’s education may not be the best one to help you return to the workforce at age 62.

If you are just starting your career, you may be looking for a financial professional who can improve your financial education and teach him how money fits into his life. Topics you may need help with could include managing debt, avoiding future debt, saving regularly, buying a first home, and planning financially for marriage and a family.

As time has passed, your needs and income have likely become more focused and stable. That’s when you can be saving for a child’s education, assessing your family’s income and tracking what career advancement with higher compensation can mean, and beginning to plan for a strong retirement, which may include a second home, generous funds for health care costs and travel. .

key takeaways

  • As you begin your working life, managing debt and learning to save may be top concerns.
  • Five to seven years into a career, earning a lucrative salary and growing savings and investments can take center stage.
  • Retired adults may need advice to stay on track financially.
  • Some retirees may decide they want or need to go back to work after consulting with a financial advisor.

Retirement comes with a different set of decisions

As you approach retirement, you may have done all your planning and saving, or you may have decided that a long working life is the best thing to do because you need more savings, specifically retirement funds.

In retirement, you may be living off the fat of a financially well-planned life, and then you may have the time, good health, and money to spend on something special, like financing a child’s education or endowing an institution. . Or you may need or want to go back to work.

Along the way, life happens without warning, which could drive you and your careful financial planning crazy. That’s why having an emergency fund and adequate insurance is key to staying afloat, something that financial planner can advise you on. You could lose a job, get divorced, deal with a serious illness (yours or a loved one’s), experience a life-changing accident, inherit a large sum of money, or be forced by circumstances to adopt the child or children. children of a relative. .

What you need to know about fees

Fees to be paid for the services of a financial advisor or planner are another point to consider. Surprisingly, though, many clients are confused and don’t know what, if anything, they’re paying advisors, according to a survey by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation. The FINRA study reported that 17% of investors don’t know what they’re paying in investment fees, 14% don’t even know if they’re paying any fees, and 60% of those who work with a financial professional don’t. I don’t think they’re paying for advice.

naturally you will pay for the services of a financial adviser. Younger investors with limited funds may be more sensitive about adding a financial planner’s fee to their budget. However, it is an area that all investors should pay attention to. Here are five ways financial advisors charge for their services:

  • Financial advisers who charge based on a assets under management (AUM) The fee structure will charge your clients a percentage based on the total dollar amount of the assets they manage. The more assets clients have, the lower the percentage they pay for advisory services, although the total dollar fee they pay increases.
  • financial advisers who are commission based receive a fee or compensation based on product sales. They receive fees when their clients make a specific financial transaction that they recommend, such as buying a stock or other asset.
  • Advisors can also charge clients by the hour instead of commissions or a certain percentage of AUM. Rates can start at $100 per hour and go much higher.
  • Financial advisers who charge a flat rate They will often provide their clients with a list of services and the rates they charge for service. Self-directed investors tend to pay advisors flat fees or opt for hourly rate payment plans. They often only seek advice from advisers or the option to use complicated asset allocation Models
  • Pay Only Financial Advisors do not accept commissions or compensation based on the sale of products. Fee-only advisors can structure their fees in many other ways. They can charge by the hour, by project, by AUM, or some combination of these. Because their income does not come from the sale of financial products, paid advisors are often seen as less biased and more focused on providing clients with personalized advice based on the client’s financial goals and best interests.

Tips to narrow your search

Whatever your age, the same basic steps apply when you set out to find your financial advisor or planner. Key among them are the professional’s credentials, experience, and ability to explain financial concepts in plain language that leave you better informed to make the right decisions for you and your family. the National Association of Personal Financial Advisors (NAPFA) offers a checklist on how to evaluate a financial professional:

  • Talk to your loved ones about what you want to achieve by working with a counselor.
  • Create a list of advisers, compiled through word of mouth tips, professional organizations, or lists. One place to start is Investopedia 100our annual list of America’s top independent financial advisors.
  • Do homework on your candidates and find three professionals by checking websites and checking for disciplinary action. You’ll find shortcuts through FINRA’s BrokerCheck and the Certified Financial Planner (CFP) Board website, which can help you evaluate brokers.
  • Create a list of questions to ask candidates, starting by asking about their approach, their fee structure, and how their work has helped clients.
  • Meet with them face-to-face, if possible, or via video conference.
  • Make sure you feel confident about experience and credentials and comfortable talking to the advisor or planner you choose.

What credentials should a financial advisor or planner have?

There are three designations a qualified financial planner could have, but the first is the most important: CFP. A CFP is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement (such as with 401(k)s). Owned and awarded by the CFP Board of Standards Inc., the designation is awarded to individuals who successfully complete initial CFP Board exams and then continue through ongoing annual educational programs to maintain their skills and certification.

A better prepared financial advisor has a Chartered Financial Analyst (CFA) designation. A CFA is a globally recognized professional designation awarded by the CFA Institute (formerly the Association for Investment Management and Research, or AIMR) which measures and certifies the competence and integrity of financial analysts. Candidates must pass three levels of exams covering accounting, economics, ethics, money management, and security analysis.

If you have a situation that is particularly related to taxes and accounting, you may want an advisor who is also certified public accountant (CPA). A CPA is a designation for licensed professional accountants. The CPA license is provided by the Board of Accountancy of each state. the American Institute of Certified Public Accountants (AICPA) provides resources for obtaining the license. The CPA designation helps enforce professional standards in the accounting industry. Other countries have certifications equivalent to the CPA designation, notably the certified public accountant (CA) designation.

What is Generation Z?

Gen Z is the nickname that many demographic researchers give to the current generation of young people. According to the Pew Research Center, Generation Z is made up of people born in the 1997-2012 era. The elders of this generation are reaching 25 years of age, and many are now out of college, getting married and starting a family. They follow the heels of millennials (born from 1981 to 1996). As a result of the COVID-19 pandemic, members of Generation Z face a more uncertain future than many previous generations faced.

What is retirement planning?

Retirement planning determines Retirement revenue goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, evaluating expenses, implementing a savings program, and managing assets and risks. Future cash flows are estimated to measure whether the retirement income goal will be achieved. Some retirement plans change depending on whether you’re in, say, the United States or Canadawhich has its unique system of workplace sponsored plans.

What is a financial advisor?

A financial advisor is a professional who helps people manage their money through investments, retirement plans, estate planning, having children, and more, depending on the advisor’s qualifications, experience, and designations.

The bottom line

It’s wise to have the right financial advisor or planner in your arsenal of professionals to help you make sound decisions, no matter your age. Young investors may be more concerned with learning how to limit debt and save more, while retirees still have many financial decisions to make that require professional input.

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