An independent financial advisor is an individual who acts independently, without directly associating with a firm to boost your financial decisions and scalability. If you need to upgrade your financial decisions, a financial advisor may be of great help. They not only help you take proper financial planning to distribute your assets but also maintains fiduciary that develops your finances.
There are many pros and cons of having an independent financial advisor like any other profession. In this guide, let’s know what factors that depend on choosing an ideal financial advisor for your business or finances.
When choosing an independent financial advisor, there are many factors that differ from an institutional or firm-based financial advisor. They do not represent any company or organization, so they will not pressurize you to buy any affiliated product that may earn them extra commission. Unlike firm-based financial advisors, they also work on small finances or achieve small financial goals for your business.
However, there are some specific parameters before you decide to choose an independent advisor to guide in you your financial planning. They are:-
- Check their registration under Registered Investment Advisors (RIA), which makes them a trusted financial advisor, as they are certified under the Investment Advisors Act, of 1940.
- Ask if they are directly related or endorsing any product to sell in your business, or if they are, why they are selling that particular product.
- Know about their fee structure, like monthly or hourly rates.
- Check about their past record with previous clients.
- Check if they are the fiduciary advisor for the benefit of their client.
- Ask if they are both competent to manage your long-term financial planning (savings, retirement funds) and your current liabilities (home loan, car loan, mutual funds).
These factors are important but are not limited to the qualifications of the independent financial advisor. Sometimes, firm-based financial advisors may give you greater benefits as they are well-updated with the latest products suitable for you in the market. Nevertheless, choosing an independent financial advisor, knowing about the product inclination or how much commission they would get by selling the product to you will give a more clear viewpoint.
Before you hire a financial advisor, be sure of your needs as to what you want to achieve from your finances to what you want to achieve in your business. It can revolve around budgeting help, education plan, debt planning, tax help, retirement planning, etc. Also, knowing about the fee structure is important, as there are commission-based, hourly-based, or one-time based upon your choices. You can find an independent financial adviser by visiting the NAPFA (National Association of Personal Financial Advisors) website or CFP (Certified Financial Planner) Board. Along with that, you can rely on your colleagues, friends to recommend a particular financial advisor for you that resonates with your goals.
An independent financial advisor is a person who helps you approach your finances in the right way. By focusing on the above mentioned factors, you can choose your suitable financial advisor to suggest you best financial planning. Financial planning is a complex structure that needs professional aid to choose the best investment for you.